A recent report from Reuters news quotes the founder of HESS Corporation, John Hess, in making statements that could begin to shake the industry. Hess’s assessment is wide reaching and all-encompassing in making predictions about the near term performance of every major shale play in the U.S..
As the 2020 year unfolds, capital expenditures have shallowed as majors enter a period of caution in their unconventional development efforts. Hess’s statements made at last weeks Argus Americas Crude Summit in Houston was sobering in estimating the United States has not, and will not become the global benchmark mover, despite its new number one producer spot.
Hess stated shale is “important but not next to Saudi Arabia.” In that ,OPEC (Organization of the Petroleum Exporting Countries) will continue to serve as the “Federal Reserve of oil”. His assessment includes predictions as to when each of the key shale plays will begin to plateau and in turn, begin their decline. The Bakken, according to Hess, will be the first to see its top as he predicted the play will peak in 2022 – just two years away.
Hess may know something as his company is a major player in North Dakota. HESS has consistently been a top 25% performer in the play and holds an “industry-leading acreage position” in North Dakota.
Hess also stated that he believes the Eagle Ford is creeping closer to its plateau while the Permian will peak by 2025. As such, the powerhouse CEO indicated that the “biggest industry challenge is the lack of long-term investment.”
In response, Hess indicated a plan to use cash from the Bakken to invest in long-term offshore projects and investments such as their Guyana offshore bid.
According the Reuters article, Hess indicated that in the Bakken, they will reach “200,000 barrels per day of production next year. It would then sideline two of its six drilling rigs in the field for several years to hold production steady.”
Hess also outed what may be an industry wide admission that “Climate change is real.” In turn, his company’s concern is more in “how do we deal with it?” rather than ignoring it. His sentiment further hints at global majors’ growing interest in renewable energy investment as he stated that technological advancements will be required to “decarbonize liquid fuel and make the electric grid stable when it’s dependent on intermittent renewable energy.”