US oil prod. to reach highest level next year: Yergin

By Ebru Sengul & Dilara Zengin

ISTANBUL (AA) - U.S. is expected to reach the highest level of oil production in its history, exceeding levels seen in the early 1980s, Daniel Yergin, vice chairman of IHS Markit, said Tuesday.

Speaking at the panel entitled, Leading Through Change, organized on the sidelines of 22nd World Petroleum Congress, of which Anadolu Agency is the global communication partner, Yergin said, "Either later this year or early next year, the U.S. will reach the highest level of production it has ever reached in history, exceeding the highest level that was established in the early 1980s."

According to Yergin, there are major changes on the global agenda of the global petroleum industry.

One of these changes is in rebalancing and recalibration, Yergin explained.

“We see a struggle being played out in the world oil industry between rebalancing on one side and recalibration. When OPEC and non-OPEC countries got together last December with a declaration of cooperation, it reflected a new stage in the history of the oil industry - the cooperation between OPEC and non-OPEC and the institutionalization of that relationship,” he said.

Yergin also noted that what is observed in the market is the impact of price.

“Sometimes people forget that price has not only an immediate impact but what signals the price gives. The signal that the price is giving, what it says about the market is the importance of innovation and in particular innovating around at a lower cost basis,” he asserted.

As one of the major changes in the market, Yergin included the “shale shock.”

As opposed to two years ago, U.S. shale really plays “a big important new part of the oil and gas industry”, Yergin said, declaring that now shale is part of the overall system.

“The numbers are quite striking. Ten years ago, Texas produced one million barrels a day, today Texas produces over three million barrels a day. And that is just in one state,” he said.

Currently, it is a “different oil industry,” Yergin said expanding that the industry has a different dynamic, rhythm and a different metric to it.

Yergin said that comparative to other expenditure in the oil industry, U.S. shale is on the rise.

“It is not a $70 business, it is a $40-$50 business. We look at our numbers of spending around the world. Every other place in the world, they are flat or even declining. The one place that numbers are going up is in U.S. shale. It is going up quite dramatically. In 2016, $11.5 billion was spent in the Permian shale. This is year it is about $26 billion. In other words, over a hundred percent increase,” he said.

This year U.S. production will be up by about a million barrels a day, he said.