European gas customers are facing a winter of uncertainty with the war between Ukraine and Russia putting supplies of natural gas in doubt. Joe Biden has promised America will help supply Europe with gas, but American shale drillers are signaling that they can’t ramp up production in time to have a meaningful effect on the gas market. Justin Jacobs, Derek Brower, and Myles McCormick report for the Financial Times, writing:
The US shale industry has warned it cannot rescue Europe with increased oil and gas supplies this winter amid fears that a plunge in Russian exports will send crude prices soaring back above $100 a barrel.
Even though oil markets have softened in recent weeks, the respite could end when an EU embargo on Russian sales comes into full effect later this year. US Treasury secretary Janet Yellen this week warned the embargo “could cause a spike in oil prices”.
However, US shale executives sitting on vast oil and natural gas reserves that could be used to alleviate a European energy crunch say they will be unable to step up supplies quickly enough to prevent winter shortages.
“It’s not like the US can pump a bunch more. Our production is what it is,” said Wil VanLoh, head of private equity group Quantum Energy Partners, one of the shale patch’s biggest investors.
“There’s no bailout coming,” VanLoh added. “Not on the oil side, not on the gas side.”
Oil and liquefied gas exports from the US have risen to take advantage of higher prices in Europe but are now near a maximum, executives said, warning crude output growth will fall short of government forecasts for around 1mn barrels a day this year.
Asked about the prospect of a big production increase from the US shale industry, Scott Sheffield, chief executive of Pioneer Natural Resources, said: “No, I don’t see it coming.”
“We’re not adding [drilling] rigs and I don’t see anyone else adding rigs,” said Sheffield, who runs one of the biggest oil producers in the US. Crude prices could rise above $120 a barrel this winter as supplies tighten, he added.
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