USA Oil Production Outlook Set to Grow

USA Oil Production Outlook Set to Grow
The U.S. oil production outlook is set to grow over the next five years, according to GlobalData.

The U.S. oil production outlook is set to grow over the next five years from 10.96 million barrels per day (MMbpd) in the beginning of 2021 to more than 12.9 MMbpd by 2030.

That’s according to GlobalData, which noted that the biggest growth is expected to happen in the Permian Basin. In a statement sent to Rigzone late Monday, the company outlined that crude oil and condensate supply in the region is projected to increase by almost 0.90 MMbpd, from 4.5 MMbpd in 2021 to 5.4 MMbpd by the end of the outlook period.

U.S. Lower 48 production is set to exceed pre-pandemic levels, GlobalData highlighted, adding that U.S. Lower 48 operators were able to reach significant drilling and completion improvements in the past year. They were said to lower the break-even price of unconventional projects to as low as $35 per barrel, a development which will make shale production in the country rebound to pre-pandemic levels by 2024, according to GlobalData.

“Despite the significant increase in oil prices, operators have been quite prudent in their capital spending and started building their strategies around high-return core assets,” Svetlana Doh, an oil and gas analyst at GlobalData, said in a company statement, which was sent to Rigzone.

“As a result, total rig count in the U.S. has been quite sluggish in response to an increase in WTI price and is still at 63 percent level compared to the number of rigs before the pandemic started,” Doh added in the statement.

“The U.S. oil and gas rig count has been growing steadily during H1 2021, however, it is down by 29 percent annually. An average of 327 rigs were active across the U.S. shale plays during H1 2021, which is 132 rigs lower compared to H1 2020. However, the recent oil price recovery has facilitated the improvement in rig activity and in January, 332 rigs were operational across major shale plays, which increased to 418 in June 2021,” Doh went on to say.

In the statement, Doh also warned that future production in the U.S. Lower 48 is likely to be affected by “the fact that President Biden’s administration will try to constrain leasing on the federal land, even though the drilling freeze was lifted by the court’s ruling earlier this year”.

“Such a measure is making the process of leasing time consuming and this alone could hurt operators with significant acreage on federal land in the long run,” Doh said. “However, the overall effect on production is not expected to be immediate. Operators have been stocking up drilling permits in advance, and secondly, drilling will still be allowed on active but not expired federal leases,” Doh added.

The U.S. Lower 48 has several “prolific” oil and gas shale plays that make “significant” contributions to the economic development of the U.S., GlobalData highlights on its website. This development is primarily driven by the major oil shales of the Permian Basin, DJ Basin, Eagle Ford and Bakken as well as the major gas shales of Haynesville, Marcellus, Utica and Scoop Stack plays, GlobalData outlines.

The U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO), which was released on September 8, highlighted that total U.S. crude oil production averaged 11.3 MMbpd in June - the most recent monthly historical data point. In its September STEO, the EIA forecasted that production will remain near that level through the end of 2021 before increasing to an average of 11.7 MMbpd in 2022, “driven by growth in onshore tight oil production”.

“We expect growth will result from operators beginning to increase rig additions, offsetting production decline rates,” the EIA noted in its September STEO.

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