Censorship by US oil executives puts shale gas OPEC meetings in spotlight By Reuters

By Sabrina Valle

HOUSTON (Reuters) – A U.S. regulator’s censure of a top U.S. oil industry official over private meetings with the Organization of the Petroleum Exporting Countries (OPEC) group of oil producers has put a spotlight on dinners attended by dozens of shale executives.

The US Federal Trade Commission (FTC) excluded the former trade commission on Thursday Natural resources pioneer (NYSE:) CEO Scott Sheffield is no longer a member of the board of directors ExxonMobil (NYSE:), which is acquiring Pioneer for $60 billion in shares.

The FTC accused the 72-year-old executive of leading a coordinated effort with other U.S. oil companies and with OPEC “to keep production artificially low” and boost oil companies’ profits.

In its complaint, the FTC pointed to meetings that shale and OPEC officials held over several years, including a series of private dinners at an energy conference in Houston.

Executives who attended earlier had described to Reuters that the meetings discussed oil demand, spare production capacity and shareholder demands.

Pioneer said Sheffield had acted in the best interests of the oil industry and its investors, and that its actions had helped increase U.S. oil production and exports.

“The FTC’s complaint reflects a fundamental misunderstanding of the U.S. and global oil markets and misinterprets the nature and intent of Mr. Sheffield’s actions,” the company said, defending its former chief as “a leading and internationally respected authority in the sector.”

The first OPEC shale gas dinner, in March 2017, was hosted by then OPEC Secretary General Mohammed Barkindo after OPEC failed to wage a price war to halt US shale oil’s rapid market share gains and wanted to understand how the industry operated, the FTC said.

Subsequent dinners at the CERAWeek energy conference in Houston brought OPEC together with shale executives, including Hess (NYSE:) CEO John Hess, Occidental Petroleum (NYSE:) CEO Vicki Hollub, Devon Energy (NYSE:) CEO Rick Muncrief, and Chesapeake Energy (NYSE:) chief Domenic Dell (NYSE:)’Osso, among others.

Spokespeople for the companies did not respond to requests for comment.

“I see a series of meetings with OPEC reaching out and spending more time with American independents than I have seen in my entire career,” Sheffield said in 2017, according to the FTC complaint.

OPEC members were stunned by the speed with which U.S. companies had recovered from losses during an OPEC-initiated price war between 2014 and 2016 that led to dozens of U.S. energy bankruptcies.

But the shale industry quickly recovered with heavy investment and made the US the world’s largest oil producer within a few years. Last year it produced a record 12.9 million barrels per day.

In 2017, OPEC cut output, reducing market gluts that were driving down global prices, handing victory to U.S. producers. The glut returned in 2020 after demand plummeted due to the COVID-19 shutdown.

Sheffield spoke out about his desire to move away from the boom-bust cycles that plagued the U.S. oil industry, becoming an outspoken advocate for prioritizing shareholder returns over production profits.

He talked about his contacts with Saudi Aramco (TADAWUL:) Officials and other members of the shale dinners attended OPEC meetings in Vienna. In a Reuters interview in March 2023, Sheffield said Pioneer had twice hosted Saudi officials and explained the company’s operations and business practices to them.

“They can get the same information from most service companies,” he said. “But they like to talk to producers… we have so much data.”