An attendee walks as top energy executives and officials from around the world gather during the CERAWeek 2023 energy conference in Houston, Texas, U.S., March 6, 2023. REUTERS/Callaghan O’Hare
U.S. energy executives and top OPEC officials on Monday discussed concerns about a lack of spare oil production capacity at a private dinner on the sidelines of a Houston conference, an executive who attended said.
The dinner with shale producers and OPEC officials continued a tradition that began around five years ago when they were fierce competitors. It has been held in most recent years during the CERAWeek energy conference in the U.S. oil industry capital.
The main takeaway from their discussion was concern among those present that there was little spare capacity in the market, Devon Energy chief executive officer Rick Muncrief told reporters as he left the restaurant.
Among the other topics that came up were strong oil demand and what U.S. shale producers could do to meet it given what shareholders want, he said.
OPEC and U.S. shale producers have enjoyed strong global demand for their oil and gas and are coming off a year of record profits for the fossil fuel industry.
Their rivalry has faded as the shale boom that took the United States to the top of the league of global oil producers and ate up OPEC market share has leveled off.
OPEC had viewed shale as an untamed force that undercut its revenue by bringing vast new oil supplies to market. Relations improved after shale companies bowed to investors’ demands for higher capital returns and cut spending on capacity growth.
This year’s event is the first that Haitham Al Ghais has attended as secretary general for the Organization of the Petroleum Exporting Countries. He stepped into the role in August.
Top executives from U.S. companies whom Reuters reporters saw attend the dinner on Monday included Chesapeake Energy Corp CEO Nick Dell’Osso, Pioneer Natural Resources CEO Scott Sheffield, Hess Corporation CEO John Hess, Occidental Petroleum CEO Vicky Hollub, Talos Energy CEO Tim Duncan and Devon’s Muncrief.
The event comes at a tumultuous time for global markets with the war in Ukraine disrupting global oil and gas flows while enriching both producer groups.
U.S. oil output is set to rise less than 600,000 barrels per day (bpd) in 2023, a much slower rate than the around 2 million bpd in 2018.
OPEC, in the meantime, has committed to cut members’ production by 2 million bpd, setting a floor on prices.
In a show of how the acrimony has fallen away, U.S. officials at the conference last year – just after Russia’s invasion of Ukraine – gifted the late former Secretary General Mohammad Barkindo a bottle of “Genuine Barnett Shale”, an homage to the region that helped spark the U.S. shale revolution.
“I was a good friend of Secretary Barkindo,” Pioneer’s Sheffield said in an interview with Reuters on Monday. “I’ve not met the current Secretary, so I know nothing about how things will go.”
Fewer OPEC officials are present at this year’s annual CERAWeek conference, with ministers from key countries, including Saudi Arabia and Iraq, absent from the attendee list.
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Big Oil to take centerstage at Houston meet as markets, alliances shift