Chevron's is the largest drilling project put on hold amid the sharp drop in oil prices. Marathon Oil and ConocoPhillips plan to cut spending next year. Fred Katayama reports.
Some black gold will have to remain under water. Chevron is shelving its plans to drill in the Canadian Arctic. It's putting on hold projects that it had been developing since 2009 with drilling targeted for the 2020s. The company blamed what it calls "economic uncertainty in the industry." That's another way of saying oil prices. The price of West Texas Intermediate crude oil has fallen by more than half since late June to a five-year low. Chevron's is the largest drilling project put on hold amid the sharp drop in oil prices. The price plunge has begun to hurt not just the shares of big oil companies but also their spending plans. After the bell on Wednesday, Marathon Oil said it would cut spending next year by 20 percent, and last week, ConocoPhillips said it would do ditto by the same percentage. But both companies still plan to pump more oil. Up north, Husky Energy, MEG Energy, and Penn West Petroleum became the latest Canadian companies to tighten their belts. Shares of Chevron and Marathon, both down sharply this year on oil's slide, rose in early trading. Barclays analyst Thomas Driscoll, who follows Marathon, said, "We continue to believe that the independent exploration and production companies will base their drilling plans off cash flow." But the consultancy Rystad Energy says falling oil prices will likely result in the suspension of global oil and gas exploration projects worth more than $150 billion. Oil extended its rebound in early trading. Light sweet crude fell for four straight sessions until it turned higher on Wednesday.