A historic crash in oil prices along with a glut of fracking after years of debt-fueled growth has triggered a crisis that’s driven some US producers into bankruptcy
Topics
Crude Oil Price | Coronavirus
The recovery in demand, coupled with the retrenchment in the US shale sector, could lead to higher oil prices as soon as in the second half of 2021, according to one of the top bosses of the largest pipeline companies in the world.
“Given the combination of the record retrenchment in drilling and completion activities by US producers, refocused capital allocation and the effects of steep decline curves resulting in a decrease in shale production, we believe this price signal for higher crude oil prices could occur as early as the second half of next year,” Jim Teague, co-chief executive officer of Enterprise Products Partners, said on Wednesday in the company’s third-quarter earnings statement.
“In the interim, we believe the midstream industry will be challenged in its producer-facing businesses,” he added.
A historic crash in oil prices along with a glut of fracking after years of debt-fueled growth has triggered a crisis that’s driven some US producers into bankruptcy and many others to slash capital spending as a way to preserve their balance sheets.
That’s also prompted consolidation in the industry, with a series of takeovers involving shale producers announced over the past few months.
As a result, American oil production is showing no immediate prospect of revisiting pre-pandemic highs.
Houston-based Enterprise, whose web of pipelines stretches from Texas to Wyoming to New York, has cut planned growth spending by $1.5 billion for 2020 and 2021 in response to adverse conditions. Last month, it shelved plans to add 450,000 barrels a day of capacity to a system that carries oil from Texas’s Permian basin to the US Gulf Coast.
The company reported third-quarter net income of 48 cents per share, up from 46 cents a year earlier.
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First Published: Thu, October 29 2020. 01:02 IST
read the full story about Crude oil price rebound may come in late 2021, says pipeline giant
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