Anadarko's View | Russell T. Rudy Energy LLC
“World Oil” recently reported Anadarko CEO, Al Walker’s, views on short term oil prices, long term oil supply, natural gas, and NAFTA. He sees production cuts by OPEC, Russia and 10 other nations as being a positive force on oil prices, especially if they are extended into 2018. However, domestic shale producers will increase production by year-end 2017 by 500,000 to 1 million barrels of oil per day. Nevertheless, he sees domestic crude inventories dropping to historical levels and this, in conjunction with the summer driving season, should enable prices to recover to the $50-60 range later this year.
Walker is concerned that the lack of investment in longer-term conventional oil projects will ultimately lead to a supply crunch. He notes that domestic shale plays can break-even at about half the price of international conventional oil projects. Inevitably, investors will choose short term, low risk, quick payout proposals over conventional ones. Walker thinks that foreign governments need to change their contract terms in order to compete successfully for capital.
Anadarko is bullish on natural gas and sees the market as oversupplied. Walker thinks that gas prices will not exceed $3.50 except when cold weather might cause temporary spikes. He notes that Anadarko has sold every dry gas property in its portfolio, but still has significant casinghead (oil well) gas production.
Finally, Walker opines that NAFTA is a major reason why natural gas prices are as high as they are. Without the agreement, he sees prices dropping to $2.00. As long as we do not do anything that disrupts pipeline sales of natural gas to Mexico, he thinks gas prices will remain stable. Walker contends that we need to look at North America as an integrated energy market. He concludes, “I think for us to be energy-independent in the U. S. is pretty difficult, but I think North America, defined as Canada, the U. S. and Mexico, can be independent.”
To read the article in its entirety, please go to http://www.worldoil.com/news/2017/5/18/anadarko-s-walker-oil-won-t-move-past-60bbl-before-2020-industry-needs-nafta .
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