Energy transition? In the United States, it's a little early to talk of this. American oil is still flowing. In September, the country broke its production record with 13.2 million barrels of oil extracted daily from the American subsoil. That's more than the 12.99 million produced just before the Covid-19 pandemic, in 2019, and above all, two and a half times more than in 2010, according to statistics from the US Energy Information Agency (EIA). Including ethanol and other products, the USA produces more than Russia and Saudi Arabia combined (between 9 and 10 million barrels a day each).
Natural gas? Same scenario. The country extracted 3.2 billion cubic meters per day, compared with 2.95 in 2019. This is twice as much as in 2010, in the wake of the discovery of hydraulic shale gas extraction. Only coal collapsed over this period, dropping from 1,100 million to 600 million tonnes of annual production.
Above all, big maneuvers in the sector have resumed. Exxon decided to buy Pioneer for $60 billion. It's an acquisition that will enable the company to exploit Permian Basin deposits in Texas. Similarly, Chevron took over rival Hess for $53 billion, coveting its deposits off French Guiana, South America, after buying shale gas producer PDC Energy, for $7.6 billion.
The US oil industry is taking its revenge after a disastrous 2010 decade of overinvestment following the discovery of shale hydrocarbons. From spring 2014 to early 2020, the sector's index (XLE) lost a third of its value on the stock market. Then, after the Covid-19 disaster, an incredible rebound took place, with the index tripling. The sector remains 13% below its 2014 value, with Chevron and Exxon's quarterly profits halved over the past year, largely due to lower oil and gasoline prices. Nonetheless, for a business that was supposed to disappear, things are going rather well.
A strong backbone in Texas
With oil expected to reach its production peak in the current decade, operators are perplexed. The idea is to pump faster and better from the American subsoil. According to US business channel CNBC, citing Baker Hughes, the number of oil wells in operation has been halved since 2018, but the productivity of new wells has risen from 668 to 1,000 barrels per day in four years. In short, oil is flowing without any real need for investment.
Above all, American major players are convinced that oil will always be useful. This strategy is at odds with that of European giants BP and TotalEnergies, who are attempting to diversify into renewable energies, although this has not prevented them from coming in for sharp criticism in Europe. BP has scaled back its investment in renewable energies and has had to reassure investors that it is not prepared for a takeover bid. The American giants, on the other hand, retain a strong backbone among Texas Republicans who swear by oil. The Financial Times is wondering about the race to be "the last oil giants standing."
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