U.S. won’t reach a new record in oil production ‘ever again,’ says Pioneer Natural Resources CEO
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.”
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.”
Kia’s electric SUVs are taking over. The EV3 is the best-selling retail EV in the UK this year, giving Kia its strongest sales start since it arrived 34 years ago. And it’s not just in the UK. Kia just had its best first quarter globally since it started selling cars in 1962.
Kia EV3 is the best-selling EV in the UK through March
In March, Kia sold a record nearly 20,000 vehicles in the UK, making it the fourth best-selling brand. It was also the second top-seller of electrified vehicles (EVs, PHEVs, and HEVs), accounting for over 55% of sales.
The EV3 remained the best-selling retail EV in the UK last month. Including the EV6, three-row EV9, and Niro EV, electric vehicles represented 21% of Kia’s UK sales in March.
Kia said the EV3 “started with a bang” in January, darting out as the UK’s most popular EV in retail sales. Through March, Kia’s electric SUV has held on to the crown. With the EV3 rolling out, Kia sold over 7,000 electric cars through March, nearly 50% more than in Q1 2024.
The EV3 was the best-selling retail EV in the UK in the first quarter and the fourth best-selling EV overall, including commercial vehicles.
Starting at £33,005 ($42,500), Kia said it’s the “brand’s most affordable EV yet.” It’s available with two battery packs, 58.3 kWh or 81.48 kWh, good for 430 km (270 miles) and 599 km (375 miles) of WLTP range, respectively.
With new EVs on the way, this could be just the start. Kia is launching several new EVs in the UK this year, including the EV4 sedan (and hatchback) and EV5 SUV. It also confirmed that the first PV5 electric vans will be delivered to customers by the end of the year.
Electrek’s Take
Globally, Kia sold a record 772,351 vehicles in the first quarter, its best since it started selling cars in 1962. With the new EV4, the brand’s first electric sedan and hatchback, launching this year, Kia looks to build on its momentum in 2025.
Kia has also made it very clear that it wants to be a global leader in the electric van market with its new Platform Beyond Vehicle (PBV) business, starting with the PV5 later this year.
Earlier today, we learned Kia’s midsize electric SUV, the EV5, is the fourth best-selling EV in Australia through March, outselling every BYD vehicle (at least for now). The EV5 is rolling out to new markets this year, including Canada, the UK, South Korea, and Mexico. However, it will not arrive in the US.
For those in the US, there are still a few Kia EVs to look forward to. Kia is launching the EV4 globally, including in the US, later this year. Although no date has been set, Kia confirmed the EV3 is also coming. It’s expected to arrive in mid-2026.
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Environment
Podcast: Tesla’s disastrous deliveries, more Trump tariffs, EV delivery numbers, and more
In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss Tesla’s disastrous deliveries, more Trump tariffs, EV delivery numbers, and more.
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Charging your EV in freezing weather could soon become dramatically faster, thanks to a big breakthrough from the University of Michigan engineers.
Neil Dasgupta, U-M associate professor of mechanical engineering and materials science and engineering and corresponding author of a study published in Joule, and his team have developed an innovative battery structure and coating that can boost lithium-ion EV battery charging speeds by a whopping 500%, even at frigid temperatures as low as 14F (-10C). “Charging an EV battery takes 30 to 40 minutes even for aggressive fast charging, and that time increases to over an hour in the winter,” Dasgupta explained. “This is the pain point we want to address.”
Freezing weather has traditionally been harsh on EV batteries because it slows down the movement of lithium ions, resulting in slower charging speeds and reduced battery life. Automakers have tried thickening battery electrodes to extend driving range, but this makes some of the lithium hard to access, making charging even slower.
Previously, Dasgupta’s group sped up battery charging using lasers to carve pathways around 40 microns in size into the graphite anode. This allowed lithium ions to reach deeper into the battery more quickly. However, cold-weather performance still lagged because a chemical layer formed on the electrodes, blocking the ions. Dasgupta compares this barrier to “trying to cut cold butter,” making charging inefficient.
To solve this, the team coated the battery with a thin, glassy material made of lithium borate-carbonate—only 20 nanometers thick—which prevented the problematic chemical layer from forming. Combined with the microscopic channels, the results were groundbreaking: the modified batteries retained 97% of their capacity even after 100 fast-charging cycles in freezing temperatures.
“We envision this approach as something that EV battery manufacturers could adopt without major changes to existing factories,” Dasgupta noted. “For the first time, we’ve shown a pathway to simultaneously achieve extreme fast charging at low temperatures, without sacrificing the energy density of the lithium-ion battery.”
This innovation could tackle one of the biggest concerns holding potential EV buyers back.
The new battery tech is moving closer to commercialization, supported by the Michigan Economic Development Corporation’s Michigan Translational Research and Commercialization (MTRAC) Advanced Transportation Innovation Hub. The research devices were built at U-M’s Battery Lab and studied with help from the Michigan Center for Materials Characterization.
U-M Innovation Partnerships assisted the team in applying for patents, and Arbor Battery Innovations has licensed the technology for market deployment. Dasgupta and the University of Michigan hold financial stakes in Arbor Battery Innovations.
Read more: California now has nearly 50% more EV chargers than gas nozzles
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