There is a limit to how big a role US shale can play in the global oil market, according to the chief executive of BP, who said traditional producers such as Saudi Arabia would continue to exert more influence over crude prices.
Bob Dudley said he had become less worried about the extent to which US shale resources could hold down prices as more was learned about their geology.
“There are cracks appearing in the model of the Permian being one single, perfect oilfield,” he told the Financial Times, referring to the region of Texas and New Mexico at the centre of the shale revolution.
Surging production of US shale oil and gas, made possible by advances in drilling technology which has given access to hydrocarbons trapped in “tight” rock formations, has weakened the stranglehold of Opec producer nations over the crude market.
But Mr Dudley said that emerging technical challenges called into question the ability of shale companies to rival conventional producers over the long term. “I don’t think [US shale] will be the perfect swing producer now,” he said. “For a while, I was worried. But I think it is going to be less solid.”
The Opec cartel, acting with Russia, has reasserted its influence over the market in the past year by agreeing production cuts that have pushed crude prices back above $60 a barrel after a deep three-year downturn caused by the shale boom.
Source: FT.com
