Schlumberger CEO Warns Pipeline Constraints Hindering Permian Growth

Reuters, September 7, 2018

The chief executive of the largest oilfield service provider, Schlumberger, warned on Tuesday that bottlenecks in the largest U.S. shale basin would slow oil production growth and investments in the region. A surge in oil and gas production in the Permian basin of west Texas and New Mexico has outstripped transport capacity, pushing the local price of oil to four-year lows and threatening to curtail drilling activity. Any slowdown could hurt oilfield service companies that have only recently started to recover from the 2014 oil-price crash.

These challenges will likely have a dampening effect on production growth, wellhead prices and investment levels in the coming year,” CEO Paal Kibsgaard said at a Barclays conference in New York. The lack of transportation capacity would be resolved by the end of 2019, he said.

Kibsgaard said market consensus that Permian production will continue to climb by 1.5 million barrels per day annually is “starting to be called into question.” The Permian produced about 3.4 million barrels of oil per day in August, or about 46 percent of all U.S. shale production, according to an estimate from the U.S. Energy Information Administration (EIA).

The hydraulic fracturing market, which had been seen as a bright spot in the North American services sector, also has softened more than expected, Kibsgaard said, as more producers hold off completing wells until oil prices climb and more pressure-pumping fleets enter the market. Schlumberger shares were down about 1.2 percent to $61.86 around 12:00 ET.

(Reporting by Liz Hampton; Editing by Dan Grebler)

Click here to read the full article from Reuters.

Copyright 2019 Thomson Reuters. Click for restrictions.

Comments and Discussion

There are no comments yet.

Add a Comment

Please log in or register to participate in comments and discussions.

Inspectioneering Journal

Explore over 20 years of articles written by our team of subject matter experts.

Company Directory

Find relevant products, services, and technologies.

Job Postings

Discover job opportunities that match your skillset.

Case Studies

Learn from the experience of others in the industry.

Event Calendar

Find upcoming conferences, training sessions, online events, and more.

Industry News

Stay up-to-date with the latest inspection and asset integrity management news.


Read short articles and insights authored by industry experts.


Commonly used asset integrity management and inspection acronyms.

Asset Intelligence Reports

Download brief primers on various asset integrity management topics.


Watch educational and informative videos directly related to your profession.

Expert Interviews

Inspectioneering's archive of interviews with industry subject matter experts.