| HOUSTON, March 6
HOUSTON, March 6 Norwegian oil producer Statoil
ASA expects its U.S. shale operations to be profitable
within two years at crude prices of $50 per barrel, an
improvement helped by simplifying operations, technological
improvements and cost cuts.
Torgrim Reitan, Statoil's head of United States operations,
said in an interview that the company's push for the lower
break-even price is largely due to internal improvements that
should stick regardless of any price hikes from service
"Our business clearly makes sense in a $50 (per barrel)
environment," Reitan said Monday on the sidelines of the
CERAWeek conference, the world's largest gathering of energy
executives. "It is remarkable to see how the whole industry has
responded positively to the new price reality."
Statoil, which produces shale oil and natural gas in North
Dakota's Bakken, the Eagle Ford of Texas and the Marcellus of
Pennsylvania, moved its U.S. operational staff to Austin, Texas,
last year, a step Reitan said has helped push down costs.
The company's U.S. shale oil break-even price stood at $66
per barrel at the end of 2016, a 35 percent improvement from the
prior year. That should drop to $50 by 2018, he said.
"That is clearly coming from us taking away complexity from
development," he said, adding Statoil's process to approve new
projects has become far more stringent since oil prices started
to plunge two years ago.
The moves come as Statoil sees U.S. shale as one of three
regions vital to its long-term growth potential, alongside
Norway and Brazilian offshore.
U.S. shale "clearly makes sense in the current environment,"
Reitan said. "It has a lot to offer moving forward."
Statoil expects service costs in the United States to rise
20 percent "within a few years," Reitan said, though he said he
didn't expect any increases to hinder its 2018 break-even goal.
The company has spoken little on OPEC policy and doesn't
forecast what the cartel could do at its next meeting in May,
"We need to be prepared for volatility, no matter what," he
Reitan declined to comment on whether Statoil was interested
in acquiring acreage in the Permian, the one bright spot in the
U.S. shale industry today due in part to its relatively low cost
In the Bakken, one of the company's largest areas of
operations, Statoil plans to add a drilling rig this year and
"slowly grow" output through the end of the decade, Reitan said.
Statoil supported the development of the controversial
Dakota Access Pipeline, seeing pipe as the safest way to
transport crude, even though the company did not contract for
transport on the line, Reitan said.
(Editing by Chizu Nomiyama)