‘Shale oil profitable at today’s price’
Production expected to go up as oil prices recover due to Opec deal, US official says
US shale production is expected to rise as oil prices increase due to the Opec agreement, a top energy official from the US State Department told Gulf News in an exclusive interview.
“As a result of Opec action, prices rose by a few dollars and as a result you’ve seen shale oil production going up again in the US. We had hit a low of 8.4 million barrels a day of the total production, we are now back up to 8.7 million barrels a day,” said Amos Hochstein, special envoy and coordinator, international energy affairs, US State Department.
He expected US oil production to reach 9.5 million barrels a day next year, similar to production levels two years ago. “As long as prices are $50 or above, we will see an increase in production in the US. In 2014, when oil prices collapsed, shale oil was considered expensive. We are seeing that the cost of shale oil has reduced very significantly and therefore it is already profitable at today’s prices.”
Getting better
Oil prices have gone up by more than 20 per cent since the 13 Opec member countries and 11 oil producers from outside the group reached an agreement to cut production by about 1.8 million barrels a day last month.
Hochstein, who was in Abu Dhabi as part of Atlantic Council Global Energy Forum, also said he doesn’t expect any changes in US energy policy under Donald Trump.
“Much of the changes are already in place, the trajectory of the market is there and I think that’s where we are going.”
When asked whether Trump will encourage shale oil production, he said it will continue to rise or fall based on market realities. “Right now, the US is an important swing producer for the global energy market that is entirely in the control of the market and prices. The US government, Trump administration or others will have very little impact on it.”
He said the renewable energy sector in the US will continue to increase in the coming days and over $50 billion worth of investments were made in the sector last year.