Anadarko CEO Robert J. Allison Jr. is not alone in predicting asustained oil market recovery now that OPEC has decided it can livewith a little less supply on the market. But unlike most of thesoothsayers attending the Howard Weil Energy Conference in NewOrleans, Allison sees a major turnaround ahead and much greatervolatility than has been present in market cycles of the past.
His reason: fixed supply at a time of steadily rising demand.”Who’s going to add new supply?” he asked. “Not BPAmoco-Arco-blank. They’re too busy managing merger consolidation.They have bigger fish and chips to fry.” And it won’t be the smalloperators who are struggling just to stay in business right now, hesaid. With oil demand growing 2 to 2.5% per year worldwide andproduction in decline, a major price surge is in store. Allisonpredicts oil prices will shoot well above $18/bbl in a much “longerand stronger” market recovery than at the end of previous cycles.He also sees much greater volatility in the oil market than hasbeen present in the past.
“We’re pleased that BP has worked its way through the A’s andpassed by us,” he said. It leaves Anadarko to take advantage of thenew opportunities created by the depressed market, in particular,the lease opportunities available in the sub-salt play in the Gulfof Mexico. Look for Anadarko to be aggressively attempting toenhance its already strong position in the Gulf this year. “It’sgreat to stay ahead of the competition. No one else is doingsub-salt like we are right now,” and Anadarko would like to keep itthat way.
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