Even as supplies tighten, ample production from U.S. unconventional drilling will pressure commodity prices for years to come, ExxonMobil Corp. CEO Rex Tillerson said Wednesday.

Evolving technology in the oilfields has allowed companies to pump more and lower costs, which is going to prevent a price “blow out” in the future, he said at the 37th Oil & Money Conference in London. The Organization of the Petroleum Exporting Countries (OPEC) tentatively has committed to stabilizing output from its 14-member cartel (see Shale Daily, Sept. 28). However, reduced costs and technology in U.S. unconventional fields will counteract any action by global operators, Tillerson said.

“I don’t necessarily have the view that we are setting ourselves up for some big collapse in supply within the next three, four, five years,” he told the audience.

Unconventional drilling can be started up quickly and cheaply, which means tight oil and natural gas seams can be developed even at a lower price, according to the ExxonMobil chief. In many U.S. onshore basins, shale is economical at $60/bbl, he said.

“It’s difficult to see a big supply precipice out there,” Tillerson said. “It’s difficult to see a big price blowout.” The boom-and-bust cycle has “confirmed the viability of a very large resource base in North America.” Unconventional oil and gas serves as “enormous spare capacity” that can be ramped up or down to meet demand.

As far as tightening markets, Tillerson reminded the audience that there still is 600 million bbl of incremental oil in storage relative to 2013. “That is a lot of oil that still has to come back at some point.”

Global energy watchdog, the International Energy Agency (IEA), said earlier this month its “supply-demand outlook suggests that the market — if left to its own devices — may remain in oversupply through the first half of next year” (see Shale Daily, Oct. 11). “If OPEC sticks to its new target, the market’s rebalancing could come faster.”

Saudi Arabia’s energy minister Khalid al-Falih’s address was a counterpoint to Tillerson’s comments, echoing IEA’s research. Falih said future oil supplies are threatened as operators have pulled back.

“On the trajectories of supply and demand that are coming…there will be potentially a shortage of supply,” Falih said. “We want to signal to the market by the gentle action of OPEC,” by working down the inventory to ensure investments resume.