The FINANCIAL -- Ryan Lance, head of ConocoPhilips, said U.S. oil production from shale reserves will rise in the coming years, as costs decline and the industry becomes more efficient, according to Nasdaq.
Conoco is one of the largest drillers of shale oil, which has become a major factor in global oil markets over the past five years. It has contributed to the bulk of global supply growth in that time.
But a sharp decline in oil prices since late last year has raised questions about how resilient the new U.S. producers can be. They use unconventional new techniques to extract oil by breaking apart the shale rock with water and sand to make the oil accessible. The process is more expensive than traditional drilling, though not as expensive as drilling in deep water or extracting oil from tar sands.
Mr. Lance said shale producers are successfully cutting costs to bring them in line with lower revenues. He said the industry has brought the break-even price at which it can turn a profit down an average of 15% from the $40-$180 per barrel range in less than a year.
He predicted the industry would also become more efficient at getting more oil from each well over time, saying that some studies say gains of 15%-20% are achievable by 2020.
"The message is that U.S. unconventional production is here to stay," he said.