Energy Secretary Rick Perry told the World Economic Forum in Davos, Switzerland, that he doesn't believe U.S. shale production will be a spoiler of global oil and natural gas prices in 2018, and he also is skeptical of projections that unconventional production is unsustainable long-term.
Speaking at an energy panel with his counterparts from India, Russia and Saudi Arabia, Perry indicated during the global forum that he didn't necessarily take as gospel projections released Wednesday by the International Energy Agency (IEA) that show U.S. production could increase to about 10.5 million b/d from 9.8 million b/d. The IEA forecast U.S. oil production in 2018 islikely to exceed 10 million b/d, surpassing output from Saudi Arabia and rivaling that of Russia.
"I would like to stand here and tell you that the numbers are absolutely correct," Perry said Wednesday. But he said CEO Harold Hamm of Continental Resources Inc., who helped provide energy advice during the Trump transition last year, “might say 'Well, you might want to take another look at those.'"
Perry told the audience he did not think domestic shale production “is going to be a spoiler, partly because there are a lot of reforms going on in the world. Those reforms have the potential to really drive consumption and innovation." He cited reforms in Saudi Arabia, Mexico and India.
Perry also dismissed suggestions that U.S. production would reach 14 million b/d by 2021, but begin to decline by around 2024, ostensibly because the United States wouldn't be able to maintain that level of production.
"We shouldn't buy into these terrible numbers that say in 2024-2025 we're going to run out of oil," Perry said. He noted there is "technology that we may see" in the future to keep domestic production robust. Rather, the "great and good story" emerging is that the world's fossil fuel producers are giving "opportunity to the world, particularly in some of the countries that haven't had the opportunity to grow on the manufacturing side.
"I know it's interesting for us to sit here and speculate what the price of oil is going to be or what the volumes are going to be...But I think it's so important for the global community to understand that the fossil fuel producers [are] making available a better quality of life and opportunities. We're blessed to be in countries with a pretty substantial ability to deliver to the people of the globe a better quality of life through those fossil fuels."
When pressed if he was concerned that U.S. producers were not disciplined, and that production would in turn suffer, Perry said simply "no."
"I think that the market has the ability to respond to this. And I think when we have a bit of a surplus...that's good for the globe."
U.S. 'Exporting Freedom'
Earlier Wednesday, during an interview with the Fox Business Network, Perry said the United States "is not just exporting energy, we're exporting freedom. We're exporting to our allies in Europe the opportunity to truly have a choice of where [they] buy [their] energy from," Perry said. "That's freedom. And that kind of freedom is priceless."
When asked to characterize the significance of U.S. energy supplies coming to Europe, Perry called the continent's shift in energy supply and control the most "dynamic" event since the end of World War II.
"The United States isn't about controlling a country with this energy," Perry said. "It's about literally freeing up our allies around the world, letting them know that we're going to be there for them. There's no strings attached when you buy American [liquefied natural gas]. So that's world-changing."
Although he declined to comment on the amount of energy supplies coming from the United States, the Energy Secretary said "my job is to make sure that it's an abundant supply, and I want to get people together so that they know that America is going to be a reliant supplier of that energy. The price will work itself out."
Perry also touched on a couple of energy sector controversies to erupt this month, including the Department of Interior's (DOI) decision to drop Florida from a draft proposal to expand offshore oil and gas drilling. Earlier this month the Trump administration also slapped a four-year tariff on imported solar cells and modules.
"I think the administration, through the DOI, is sensitive to the issues there," Perry said of offshore drilling in Florida. "There's plenty of space” to drill, he said, whether it’s in the Gulf of Mexico, the Arctic National Wildlife Refuge or elsewhere…”[W]e can develop the energy resource that we have. The people of Florida said, 'Hey listen, we don't want to add any new drilling platforms.' The administration respected that."
On the possibility of the solar tariff triggering a trade war, especially with China, he said, "you shouldn't be worrying about this administration from the standpoint of transparency and fairness. That's what Donald Trump is all about. You want to compete against the United States? Bring it. But don't subsidize in a way that is unfair. Don't get into the market and try to gobble up all of the market, and then all of a sudden, after you've choked everybody else out of the market, guess what? Prices go up."