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ConocoPhillips sees global oil demand returning, executive says

09/25/2020 | 02:26pm EDT
FILE PHOTO: The ConocoPhillips Alaska Inc. building overlooks the frozen Westchester Lagoon in downtown Anchorage

(This Sept. 24 story, corrects projected U.S. shale output to likely struggling to achieve 7 million bpd by 2022 instead of likely falling by 4 million bpd in 2022, paragraph 4))

By Jennifer Hiller

U.S. oil producer ConocoPhillips sees global demand returning to 100 million barrels per day and growing from there, with oil an "important part of the energy mix in any scenario" going forward, a senior executive said on Thursday.

The view stands in contrast to that of rival BP Plc, which sees the coronavirus pandemic leaving a lasting effect on global energy demand, though ConocoPhillips still expects "quite a bit of uncertainty next year," Senior Vice President Dominic Macklon said during a Q&A with Raymond James.

The company's capital spending in 2021 will be "somewhat below" its original planned 2020 level of $6.6 billion, Macklon said.

The hardest-hit area of the oil industry in 2020 has been U.S. shale, where producers cut production and sidelined equipment as oil prices crashed. While shale output was about 8.2 million bpd at the start of the year, at current prices the industry will likely struggle to produce 7 million bpd by 2022, Macklon said.

ConocoPhillips left seven drilling rigs at work in shale fields, but cut all fracking crews earlier this year as oil prices crashed. It is returning two fracking crews to work, Macklon said.

Some shale producers are stockpiling federal drilling permits ahead of the Nov. 3 U.S. presidential election as a hedge against possible rule changes under a Democratic administration.. Just 20% of ConocoPhillips' Permian Basin acreage is on federal land in New Mexico, while the company expects to receive permits within a month for its Willow project along Alaska's North Slope, "in which case we wouldn't be exposed" to changes, Macklon said.

In July it agreed to buy land from Kelt Exploration Ltd in Canada's Montney shale oil play, in a $375 million deal. The 140,000 acres in British Columbia are adjacent to ConocoPhillips' own Montney lands.

Asked whether it would consider a purchase in an area where it does not already operate, Macklon said yes, but the preference is for assets "we know and understand well."

(Reporting by Jennifer Hiller in Houston; Editing by Nick Zieminski and Matthew Lewis)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BP PLC -1.16% 358.8 Delayed Quote.42.50%
CONOCOPHILLIPS 0.93% 76.02 Delayed Quote.90.10%
KELT EXPLORATION LTD. 0.00% 4.95 Delayed Quote.175.00%
LONDON BRENT OIL -1.24% 84.74 Delayed Quote.64.56%
RAYMOND JAMES FINANCIAL, INC. 1.30% 101.67 Delayed Quote.57.37%
WTI -1.14% 82.622 Delayed Quote.71.24%
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