ConocoPhillips Chairman and Chief Executive Officer Ryan Lance told IHS CERAWeek that ConocoPhillips is prepared for oil-price swings going forward, and it has positioned itself to ramp up its core US unconventional investments when it appears feasible.
“If $80-90/bbl oil is coming back, there is a good chance that $50-60/bbl is coming back as well,” Lance said during a news conference after his Apr. 20 speech. “We’re planning to ramp up” once ConocoPhillips executives believe oil prices are back into the $60-70/bbl range for a sustainable period, Lance said.
IHS Inc. Vice-Chairman Daniel Yergin and other oil company executives attending the annual energy conference in downtown Houston also forecast continued price volatility.
“This is a market that’s far from settled down, and it’s a market that’s going to be a lot more volatile,” Yergin said. “What kind of prices do you need to keep it going? What does it mean when you say the US is the new swing producer? It’s much easier to swing up than down,” he said.
Separately, Kuwait Foreign Petroleum Exploration Co. (Kufpec) still intends to meet its 200,000 b/d petroleum production goal by 2020 despite the current oil price slump, Kufpec Chief Executive Officer Nawaf S. Al-Sabah said during a session on innovation on Apr. 20.
“Last month we were averaging about 80,000 b/d,” Al-Sabah said. “This puts us within striking distance of our 200,000 b/d target.”
Kufpec will continue increasing its production, he said, noting companies that lose sight of long-term goals during price downturns run the risk of falling behind their competition. For instance, Al-Sabah said massive layoffs during the 1980s left industry short on engineers and others in this decade.
Producers need to realize that for the time being the market has a “new normal,” Al-Sabah said, adding that one benefit of lower oil prices is the possibility that long-term growth investments might become less expensive.
“We believe this price environment is the right time to make strategic moves,” he said. “Companies with strong-growth agendas must not go wobbly.”
Muhammad Al-Saggaf, acting head of Saudi Aramco’s shared operations and services, warned against cutting research dollars and abandoning innovation during a downturn.
“A down cycle is actually an opportunity,” Al-Saggaf said. “It is easier to find collaborators who are eager to work with you during a down cycle. Many times, it’s also cheaper.”
Steve Bolze, General Electric’s power and water division president and chief executive officer, said that research must remain focused and aim high during downcycles.
“This is not the time to be timid. You’ve got to make bets,” Bolze said.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.