ConocoPhillips Chairman and CEO, Ryan Lance, has discussed the current situation in the oil and gas industry and the future of energy laws at yesterday’s opening session of IHS CERAWeek 2015 in Houston.
Ryan Lance started his speech by recognizing that the industry is indeed “living in turbulent times”.
“Just a few years ago, we at ConocoPhillips envisioned a scenario like the one we are going through today. We called it and named it in our company the Tidal Wave scenario,” Ryan Lance said.
According to Lance, the key elements associated with that scenario are flood of production from the innovation that is going on in the United States, weak U.S. demand due to renewable fuel standards and car efficiency, weak demand elsewhere around the world, subpar economic results and growth and really low and uncertain commodity prices.
Lance stated that the current situation already swept some of the players and that everybody is “treading water”; however, he added that the broader implications include the impact on the U. S. economy along with the economies of other producing nations around the world.
In between 2008 and 2013, 40% of the U. S. GDP growth came from oil and gas and its related support industries. “But there are some troublesome signs on the horizon,” Lance said.
“The U. S. Labour Department tracks the oil and gas extraction and support activity jobs and they report that we’ve already lost 20,000 jobs since February and if you look at all of the announcements they add up to close to 100,000.
“So the industry really is in a bit of a survival mode. We’ve seen job cuts and efforts to achieve growth at lower costs,” Lance explains.
“Certainly, it’s the same at ConocoPhillips, we’ve taken our capital down, we’re reducing our exploratory drilling, we’re deferring projects, we’re focusing our developments on lowest costs of supply opportunities in the portfolio and we’re moving to reduce our costs.”
In his speech, Lance emphasized that the U. S. does need corporate tax reform, but “it should be industry neutral with clear and simple rules and it certainly shouldn’t impose double taxation on overseas earnings”.
— Bartolomej T (@BartolomejT) April 20, 2015
Offshore Energy Today Staff