A rig hand works on an electric drilling rig for oil producer Civitas Resources, at the Denver suburbs, in Broomfield, Colo., on Dec. 2, 2021. (Liz Hampton/Reuters)
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America’s oil supply problem is worse than most predictions, Ezra Yacob, president of EOG Resources Inc., told analysts during a third-quarter earnings call.
Oil production in the United States will maintain a low growth rate in 2023, he said.
The number of oil rigs, frac spreads, and workers indicated a low growth rate in the near future, he said.
Also, fewer companies have the capacity to produce oil after the pandemic and the companies are more cautious about investing more in this sector.
“I do think coming out of the pandemic, we’ve had a consolidation across the industry. … You’ve been left with less companies, and those companies that have the size, the scale, balance sheets, things of that nature to be able to continue to drill and operate,” he said. “And the majority of those companies are drilling and investing in a way that’s more disciplined than what was in favor prior to the pandemic.”
Yacob believes the trend will not end soon.
“And quite frankly, a lot of those things that I’ve talked about are not necessarily transitory in nature. Some of these things will really continue into 2023 as well,” he explained.
EOG holds a view more pessimistic than many other estimations, Yacob acknowledged.
EOG was known as Enron Oil & Gas before it separated from Enron in 1999.
Biden to Talk With Oil Companies
Oil production has been recovering from the COVID-19 pandemic since August 2020. However, the pace of oil production is relatively slow, though oil prices increased fast after the pandemic.
Oil production still hasn’t reached the level before the pandemic.
Industry insiders and experts warned that companies are hesitant to make long-term investments in the fuel industry because of uncertainty in Washington and hostile attitudes toward the industry by the Biden administration.
Low domestic oil production in America and oil production cuts by OPEC+ caused oil prices to stay high and drove gas prices up.
Meanwhile, President Joe Biden has blamed the oil companies and gas stations for high gas prices.
Biden said that he’s going to talk with the oil companies directly soon.
“I’m working like hell to deal with the energy prices. I’m going to have a little, as they say, come-to-the-Lord talk with the oil companies pretty soon,” he told the audience during an event in California on Friday.
White House press secretary Karine Jean-Pierre confirmed in October that the Biden administration is in touch with the oil companies.
“The Department of Energy has been in regular contact and has held meetings … with these different companies, and they’ll continue to have those conversations. Members of our team at the White House have also been in close contact,” she said on Oct. 17.
