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Haliburton: The Era Of Exponential Growth In U.S. Oil And Gas Is Over

The era of “exponential” growth in the U.S. oil and gas industry is over as most shale firms are returning cash to investors instead of going into debt to drill more, according to Halliburton, the world’s largest fracking services provider.

“We'll see growing investment, but quite frankly, nothing even close to what we saw from 2008 to 2014,” Halliburton’s CEO Jeff Miller said at a panel at the ADIPEC energy conference in Abu Dhabi on Tuesday, as carried by The National.

“Companies were spending at a rate of 120 percent of their cash flow and that can’t go on indefinitely,” Miller said.

Since the pandemic crash, however, the U.S. shale patch has focused on returning money to shareholders, paying down debt, and healing balance sheets. U.S. oil and gas production has rebounded but the growth rate is nowhere near the record growth from 2018 or 2019.

This year, supply chain delays and cost inflation have combined with U.S. shale’s newfound spending discipline to hold back production growth.

Pioneer Natural Resources CEO Scott Sheffield has said that U.S. oil production growth would likely disappoint both this year and next.

Sheffield has forecast that U.S. oil production will add 500,000 bpd this year but in 2023 the production gains may be lower than this, due to constraints, Reuters reported in September.

In its October Short-Term Energy Outlook, the EIA suggests that U.S. crude oil production will average 11.7 million bpd in 2022 and 12.4 million bpd in 2023, which would surpass the record high set in 2019. But the EIA has revised down its growth forecasts since the start of this year, while analysts say its current estimates are too optimistic.

The U.S. oil and gas industry continues to be frustrated with the mixed messages from the Biden Administration, which continues to blame oil companies for high gasoline prices and demands that oil firms “lower the prices for consumers at the pump.”

Commenting on President Biden’s latest remarks on gasoline prices and the threat that oil firms are “going to pay a higher tax on their excess profits and face other restrictions” if they don’t increase output, American Petroleum Institute (API) President and CEO Mike Sommers saidthis week, “Rather than taking credit for price declines and shifting blame for price increases, the Biden administration should get serious about addressing the supply and demand imbalance that has caused higher gas prices and created long-term energy challenges.”

“Oil companies do not set prices—global commodities markets do,” API’s Sommers said.

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