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Pioneer CEO: Oil 'will work at $60' - Odessa American: Inthepipeline

Pioneer CEO: Oil 'will work at $60'

Company bullish as officials unveil $76 million Midland HQ

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Posted: Wednesday, November 19, 2014 7:16 pm

Pioneer Natural Resources CEO Scott Sheffield expressed optimism for the Permian Basin Wednesday with plans to increase his company’s already dominant production by up to 21 percent next year even as the rig count declines amid lower oil prices.

Further evidence of Sheffield’s bullishness lied in the $76 million regional headquarters Pioneer unveiled in Midland’s ClayDesta development. The more than 260,000 square-foot building has room for about 550 employees and various amenities, and it was touted by Pioneer, other local oilmen and government officials as a long-term commitment to the region.

“What’s changed versus other downturns in this city is that this field is probably one of the best fields in the world,” Sheffield said. “It will work at $60. It will work at $80. You just can’t drill as many wells at $60. Where before you might have the rigs drop down to a very very low level, now they are just going to drop 10 to 15 percent. Now it’s still very economical for producers to be able to drill. So it’s very different from past boom-bust cycles.”

In the next five to seven years, the CEO of the more than $24 billion independent oil company based in the Metroplex said he expects to double its Permian Basin workforce, now numbering about 1,700 employees.

Pioneer employees chose the location of the building at 3617 N. Big Spring St., announced in 2012.

“Generally you don’t move into a building like this and move out the next day, Scott, so I’m assuming you’ll be here for a while,” said State Rep. Tom Craddick of District 82. “We hope you’ll grow it rapidly and have to build another one.”

Sheffield encouraged the City of Midland and surrounding governments such as City of Odessa to continue to invest in infrastructure that might have an opportunity to catch up to demand as oil activity slows.

The West Texas Intermediate oil price benchmark on Wednesday was about $74, roughly 30 percent less than the high reached in June. The slide dovetails with a drop in global oil prices resulting from hints that the Organization of Petroleum Exporting Countries will cut prices in the face of oversupply and weaker-than-expected global demand.

Sheffield, like many of his peers, sees the move from OPEC as evidence of Saudi concern about the American shale boom that decreased crude imports by some 30 percent. In response, Sheffield has been one of the chief advocates of reversing the crude oil ban in place since the 1970s.

Pioneer earlier this year was one of two companies this summer granted permission by U.S. Commerce Department to export condensate, a lighter-gravity hydrocarbon often classified as crude.

Sheffield argues that lifting the ban could help shore up the WTI against the global price benchmark, the Brent, and that it makes sense given that the country permits exporting other hydrocarbons.

“Why not export oil?” Sheffield said. “The Permian Basin has been receiving about $20 less than Brent . . . on the world market so it’s not fair. And they need to lift the export ban. It’s better to have U.S. production than import Middle East production.”

But Pioneer touts advantages in weathering the price downturn...To read the rest of this story, go to myoaoa.com.


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