The federal government predicts the U.S. will see record crude oil production this year and next.
The January 2023 Short-Term Energy Outlook, released this week by the U.S. Energy Information Administration, will average 12.4 million barrels a day and 12.8 million barrels a day in 2024. If true, the 2023 production will surpass the previous record of 12.3 million barrels a day set in 2019. Last year’s production was an estimated 11.9 million b/d.
“Increased production in the Permian region and, to a lesser extent, in the Federal Offshore Gulf of Mexico (GOM) drives our forecast growth in production. We base our forecast on our expectations of crude oil prices and infrastructure capacity additions,” stated the EIA in its forecast.
The report expects crude oil production to increase in the Permian Basin by 470,000 b/d to average 5.7 million b/d this year.
Completion of new natural gas pipelines will allow producers to transport more of the natural gas that is produced along with crude oil (associated natural gas) to market, removing a potential constraint on crude oil production. Producers currently flare some of the natural gas they produce.
The EIA expects production in the Gulf of Mexico to grow by 120,000 barrels a day this year while production in other regions of the U.S., with the exception of the Permian, will decline slightly.
In 2024, the EIA anticipates crude oil production in the Permian will gain by 350,000 b/d but will decline slightly in the Gulf of Mexico. There will be expected production growth in the other crude oil-producing regions by 70,000 b/d in 2024.
Prices and what to expect?
“We forecast the U.S. benchmark West Texas Intermediate (WTI) crude oil price will average $77 per barrel (b) in 2023 and $72/b in 2024, down from $95/b in 2022. Despite declining crude oil prices, we expect the WTI price will remain high enough to support crude oil production growth, especially in the Permian, where data from the Dallas Fed Energy Survey indicate that average breakeven prices range from $50/b to $54/b,” wrote the authors of the EIA forecast.