“The phenomenon of shale oil is real and when prices rise to $60 a barrel you will see the level of active rigs rise. This is inevitable,” Ali Moshiri, president of African and Latin American Exploration and Production for Chevron, said during a panel event in London.
But while U.S. shale could come back with a vengeance at $60 per barrel, those prices are unlikely to be high enough to justify massive investments in long-cycle deepwater projects. Even though shale projects tend to be relatively expensive, they can be much less risky because of their short-cycle nature, requiring small upfront investments and very short lead times. Large-scale projects, on the other hand, are no longer a priority in a world of low (and volatile) oil prices. Deepwater and expensive heavy oil projects will be “very difficult” unless oil prices move up to between $60 and $80 per barrel, Chevron’s Moshiri said at the London O&M conference. That was echoed by the CEO of ConocoPhillips, who said that prices are “still pretty low to justify significant investments,” referring to large-scale, multiyear projects.