U.S. Energy Output Poised to Surpass Russia, Pimco’s Kiesel Says

The U.S. may surpass Russia as the world’s largest energy producer in the next 10 years as output of natural gas climbs, according to Pacific Investment Management Co.’s Mark Kiesel.

New oil shale development will start to pay off in the next few years, Kiesel, the mutual fund company’s global head of corporate bond portfolios, said in a report today on Pimco’s website. Technological improvements such as hydraulic fracturing, or “fracking,” and horizontal drilling have helped drillers boost gas production, according to Kiesel.

“Onshore natural gas shale and oil shale developments are creating opportunities to invest in energy companies that may grow significantly faster than the overall U.S. economy,” Kiesel wrote.

Investors should buy debt issued by energy producers, pipeline owners and chemical companies, Kiesel said. Pimco, the Newport Beach, California-based manager of the world’s largest bond fund, has been bullish on the energy sector for about a decade, he said.

U.S. oil and gas producers have learned to tap previously impermeable deposits of oil and gas by fracturing rock with mixtures of water, sand and chemicals injected under high pressure. That technique can yield commercial quantities when combined with horizontal drilling, a lengthwise bore that can expose a mile or more of gas or oil-bearing rock.

To contact the reporter on this story: Zeke Faux in New York at zfaux@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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