U.S. won’t reach a new record in oil production ‘ever again,’ says Pioneer Natural Resources CEO

Published

2 years ago

March 9, 2023

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Pioneer CEO on future production, oil price outlook and a new era for energy

While oil production in the U.S. will continue its return towards pre-Covid levels, limits on refining capacity and inventory mean it will not grow as much as some hope, according to Pioneer Natural Resources CEO Scott Sheffield.

“We just don’t have that potential to grow U.S. production ever again,” Sheffield told CNBC’s Brian Sullivan on Tuesday at CERAWeek.

To be clear, this doesn’t mean no production growth. Many oil companies have outlined production increases as part of spending plans this year, though oil companies are now in an era of greater fiscal discipline, not shy about signaling they will favor shareholder rewards like stock buybacks over higher production levels. Sheffield expects growth to top out at a level that was already reached pre-pandemic.

“We may get back to 13 million barrels a day,” he said, which would match the record high average recorded in November 2019 by the U.S. Energy Information Administration. But he added it will be at a “very slow pace,” taking two and half to three years to match that previous record level.

For consumers, that means gas prices are more likely to stay within the current range, and pricing risk be tilted to the upside later this year.

According to the EIA, an average of 11.9 million barrels of U.S. crude oil were produced per day in 2022, below the record in 2019 of an average of 12.3 million barrels per day. The EIA is forecasting a new record for this year, but barely higher, at an average of 12.4 million barrels per day.

“We don’t have the refining capacity … if we all add more rigs, service costs will go up another 20%-30%, it takes away free cash flow,” Sheffield said. “And secondly, the industry just doesn’t have the inventory.”

Drilling rigs sit unused on a companies lot located in the Permian Basin area on March 13, 2022 in Odessa, Texas.

Joe Raedle | Getty Images News | Getty Images

The price of a barrel of oil has fluctuated between $75 and $80 this year, well off the $100+ prices seen this time last year. While the level of economic slowdown in the U.S. will be a significant factor as the Fed continues to signal its commitment to higher rates, Sheffield said he sees these current prices as “the bottom,” citing the demand boom expected alongside the reopening of China.

“The question is when do we break out? I predict sometime this summer to break fast $80, on the way to $90,” he said.

Occidental CEO Vicki Hollub told Sullivan at CERAWeek that the $75-$80 range for oil prices is a “sustainable price scenario for the industry to continue to be healthy.”

“I think gas prices at the pump are not so bad at this price, so I think it’s optimal,” she said.

The EIA forecast for gas prices is an average $3.57/gallon this year, down from the $3.97/gallon seen in 2022.

The White House has pushed oil companies to use their record profits to ramp up production instead of on buybacks or increasing dividends.

“My message to the American energy companies is this: You should not be using your profits to buy back stock or for dividends. Not now. Not while a war is raging,” President Joe Biden said at a press conference in October. “You should be using these record-breaking profits to increase production and refining.”

During his State of the Union address in February, Biden noted that “Big Oil just reported record profits…last year, they made $200 billion in the midst of a global energy crisis.”

Biden said U.S. oil majors invested “too little of that profit” to ramp up domestic production to help keep gas prices down. “Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders.”

Oil prices are in a good place right now, says Occidental Petroleum CEO

Occidental, which was the No. 1-performing stock in the S&P 500 in 2022, completed $3 billion in share repurposes last year. In 2023, the company has already authorized a new $3 billion share repurpose authorization and a 38% increase to its dividend.

While Hollub told CNBC’s Sullivan on Monday at CERAWeek that the company does have the ability to produce more oil — it is forecasting 12% production growth this year — “We have a value proposition that includes an active buyback program and also a growing dividend and we always want to make sure we max out our return on capital employed.”

“So, we are very careful with how we structure our capital program on an annual basis to make sure we still have sufficient cash to buy back shares,” Hollub said.

She cited the lack of new oil capacity, which is still near the same level as it was pre-pandemic, and the contraction in the refining sector. “We’re still limited,” she said.

While the industry can balance the supply issues by importing more of the heavy crude handled by U.S. refiners and exporting more of its own light crude, and existing refiners can add capacity, Hollub said it’s not likely that many new refining complexes will be built.

Chevron CEO Mike Wirth told S&P Global vice chairman Daniel Yergin during an on-stage interview at CERAWeek that he has concerns about the exogenous events that can lead to an abrupt supply-demand imbalance in a world which has created new limits on the flow of oil to markets, including the ban on Russia oil in the EU and U.S.

“What concerns me is we have introduced new rigidities into these systems,” Wirth said. “Normally, it’s one big just-in-time delivery machine and demand grows slowly and production grows slowly,” he said. “There’s not a lot of swing capacity or inventory capacity. … The market is tight and the logistics system has been stretched in ways it normally isn’t.”

Hess CEO John Hess said on Tuesday at CERAWeek that “biggest challenge is investment and having policies that encourage that investment.”

“Energy has a supply chain, and the energy industry has a structural deficit in investment,” Hess said. “We have higher interest rates, we have tighter financial markets; all of this makes the mountain steeper.”

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GE Vernova lands repower orders for 1 GW of US wind turbines

Published

2 hours ago

January 24, 2025

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GE Vernova lands repower orders for 1 GW of US wind turbines

GE Vernova repower wind — Photo: GE Vernova

GE Vernova’s onshore wind business announced that it received orders in 2024 to repower over 1 gigawatt (GW) of wind turbines in the US.

Wind energy repowering is all about breathing new life into older turbines. By swapping out aging parts like turbines, blades, and nacelles for the latest tech, wind farms see significant boosts in efficiency, power capacity, and overall lifespan. Other infrastructure and control systems can also get a second life.

Adding new components to existing infrastructure and grid connections means it’s less expensive to extend the life of the wind farm with fewer resources. New components make the turbines less prone to breakdowns which means less maintenance, so there are fewer operational costs.

The repowering projects for which GE Vernova received orders will use nacelles and drive trains that it manufactures in its Pensacola, Florida, factory.

“As the United States works to meet the doubling of projected demand for more energy, repower projects like these help US workers in US factories take advantage of what we already have, where we already have it,” said Matt Lynch, general manager of Repower at GE Vernova.

The orders were booked between the first and fourth quarters of 2024. GE Vernova’s wind repower projects are expected to come online between 2024 and 2027.

GE Vernova’s onshore wind business has a total installed base of approximately 56,000 turbines and nearly 120 GW of installed capacity worldwide.

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Kia’s NACS adapters available now; Supercharger access still pending

Published

3 hours ago

January 24, 2025

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Kia's NACS adapters available now; Supercharger access still pending

Kia’s official first-party NACS adapters are now ready to ship out, but owners will have to wait to use them on Tesla Superchargers until later this quarter.

The rollout of Supercharger access to non-Tesla brands is hitting a fever pitch this year, with several brands added to the “coming soon” list, and even beyond that, VW and Honda have both made their own announcements that access is coming soon.

But for most vehicles, charging on Superchargers will require an adapter for the time being, as most brands aren’t adding native NACS ports to their vehicles until a future date (the current exceptions are the 2025 Kia EV6 and Hyundai Ioniq 5 which have native ports).

Each manufacturer is dealing with adapter rollouts separately, and Kia’s ready to announce that their adapters are ready to go.

Kia told us today that shipments of first-party adapters are currently en route to dealerships, and certain owners will be getting a notification soon to claim their adapter.

In Kia’s previous announcement about adapter availability, it said that any 2024 or 2025 EV6 or EV9 owners who took delivery after September 4 would get a free NACS adapter. Those owners should receive a push notification soon in their Kia Connect app through which they can claim their adapter.

For other owners, adapters will be available from Kia dealers for $249, which is roughly in line with the average cost we’ve been seeing for these adapters. Dealers should be getting the adapters any day now.

However, these adapters will be of limited usefulness for the next several weeks. You’ll be able to use them to charge at Tesla destination chargers, or any home charger with a Tesla/NACS plug on it, but Supercharger access still requires a handshake between the car and the charging network, and that handshake is currently disabled.

Originally, Kias were going to gain access on January 15th, but that was pushed back until the “back end of this quarter.” Some owners found out a loophole to allow for charging on the network, but that loophole was closed just yesterday.

As a result, Kia is also including “definitive instructions” on how to use the adapters along with each shipment. It wants to ensure that everyone is using them properly, especially given the recent back-and-forth about, uh, unsanctioned methods to access the network before official availability.

Kia’s EV6 with the native NACS port has also taken longer to arrive than Hyundai’s 2025 Ioniq 5. Ioniq 5s are already shipping (and can even charge faster than Teslas at a Supercharger, a feat the EV6 should also achieve), but EV6s haven’t yet hit dealerships. They should be on around the same timeline as Supercharger access, and ought to be available in the back half of this quarter.

So… Kia fans will still have to wait a little bit, but at least you’ll have the adapters ready to go for when the floodgates open later this quarter.

If you’re looking to buy one of the fastest-charging EVs on the road today, use our link to check local dealers and get in line for when they get the new 2025 Kia EV6s in stock.

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Kempower and Ziegler partner on EV fast charging for fleets

Published

3 hours ago

January 24, 2025

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Kempower and Ziegler partner on EV fast charging for fleets

EV charger manufacturer Kempower and Ziegler Energy Solutions have paired up to deliver EV fast charging infrastructure for commercial fleets.

To put it simply, Finland and US-based Kempower brings DC fast chargers to the table, and Ziegler Energy Solutions’ (ZES’s) specialty is infrastructure, energy efficiency, and operational flexibility, along with sales and service.

“As businesses and municipalities increasingly transition to electric fleets, reliable and adaptable EV charging infrastructure with the highest uptime is paramount,” said Troy Monson, general manager of Ziegler Energy Solutions. “Partnering with Kempower enables us to deliver scalable, user-friendly solutions that support our customers’ electrification goals and operational needs.”

ZES, which is now a Kempower Certified Partner, helps fleet operators address challenges like high mileage, uptime demands, and energy cost management using its EV fleet planning tools that simulate real-world scenarios like duty cycles, charging schedules, and energy needs. It also has a leasing program, and integrates solar and battery storage into fast charging infrastructure.

This means Kempower can now offer its DC fast chargers to fleet operators with ZES’s support, ensuring uptime and reliability.

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