EOG Resources Inc. CEO Bill Thomas said he believes takeaway issues in the Permian Basin will cause growth to slow temporarily, and the slower pace of development should help ensure that commodity prices don't collapse.
Thomas told attendees of the Barclays CEO Energy-Power Conference in New York that the Houston-based company's model of adding new plays to its portfolio gives it the ability "to redistribute capital in more different places.
"We believe that's the model you need to continue really strong growth and do it with a disciplined manner," Thomas said Wednesday.
On the Permian, Thomas said development "ramped up very quickly. For some operators, not EOG, they ramped up faster than the takeaway infrastructure could handle it. That may have put a damper on some operators, but that's a temporary thing for the industry and that will be fixed in a pretty quick order." EOG holds 895,000 net acres in the Delaware sub-basin of the Permian.
"Our view as an industry for the Permian is probably a little bit more subdued on growth than most people would have it. It will grow certainly for the next few years, but it will grow at a slower pace every year. And it won't be the thing that's going to destroy oil prices again because it's going to grow so fast and grow oil.
"I think in general, for the whole U.S., it's the same thing. When the volumes get to where they are right now, it takes a lot of capital and a lot of focus to grow at really high rates. So the growth rate for the U.S., I believe will slow down, too."
Thomas said with nearly 20 years of solid unconventional drilling under their belts, operators that decide to focus on one basin or play may find it "very difficult to continue high rates of growth, because you get into developing into the middle of these plays, and downspacing and everything kind of gets a little bit harder to sustain those really high growth rates.
"You see the highest growth rates early in the plays, and as the plays get bigger and more mature the growth rates will slow down."
EOG is active in the Bakken and Eagle Ford shales, the Midcontinent, and the Denver-Julesburg, Permian and Powder River (PRB) basins. Last month, the company announced plans to develop the PRB's Mowry and Niobrara formations. EOG’s share of the plays equals an estimated 1.2 billion boe from 875 locations using 660-foot spacing, with at least half of the resource expected to be crude oil.