UPDATE 2-U.S. oil output on brink of "dramatic" decline, exec says

Tue Oct 6, 2015 1:31pm EDT
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* World prices seen too low to support U.S. shale oil output

* Lack of bank financing seen for new shale developments

* Risk low production levels may cause price spike

* U.S. oil sector productivity improvements seen near limit (Recasts; adds U.S. production forecasts)

By Dmitry Zhdannikov and Ron Bousso

LONDON, Oct 6 (Reuters) - Oil executives warned on Tuesday of a "dramatic" decline in U.S. production that could pave the way for a future spike in prices if fuel demand increases.

Delegates at the Oil and Money conference in London, an annual gathering of senior industry officials, said world oil prices were now too low to support U.S. shale oil output, the biggest addition to world production over the last decade.

"We are about to see a pretty dramatic decline in U.S. production growth," the former head of oil firm EOG Resources Mark Papa, told the conference.

Papa, now a partner at U.S. energy investment firm Riverstone Holdings LLC, said U.S. oil production would stall this month and begin to decline from early next year. He said the main reason for the decline would be a lack of bank financing for new shale developments.   Continued...