Story By Mella McEwen |Midland Reporter Telegram| Despite a nearly 25% decline in the rig count last year, US crude oil production continued to rise, averaging 13.3 million barrels per day.
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That growth was spurred by productivity increases in new wells, according to the US Energy Information Administration’s recent Petroleum Supply Monthly. The agency said in its report the nation’s crude oil production has risen to record highs since 2010 and risen even more quickly in recent months despite falling drilling activity.
Since first surpassing the previous record in August 2023, US crude oil production has increased another 2%, exceeding the pre-pandemic November 2019 peak by 300,000 barrels per day.
According to the EIA’s Drilling Productivity Report, rising production came from a combination of rising new well production and higher sustained legacy well production. New well production is defined as production during the first 12 months while legacy production is defined as production after those initial 12 months. The EIA said the share of legacy production has remained stable since 2021 while production from new wells has continued to increase.
In the Permian, the agency pegged new well production at 1,359 barrels per day from one average rig and expects that to increase to 1,372 barrels per day from one average rig. New natural gas production was pegged at 2,512 Mcf per day from one average rig in March which increased to 2,523 Mcf in April.
Legacy production from Permian Basin wells is forecast to fall 422,000 barrels per day from March to April. Last April, legacy production fell 370,000 barrels per day from the previous month, according to the EIA.
All told, the EIA forecasts that Permian production will total 6.10 million barrels per day in March and 6.11 million barrels a day in April. Natural gas production is expected to total 25,058 Mcf per day in March and 25,192 Mcf in April.
EIA researchers noted that the number of new wells brought online by drilling activity has historically been the key determinant of whether crude oil production increases or decreases. However, advances in horizontal drilling and hydraulic fracturing technologies have increased well productivity, enabling producers to extract more crude oil from new wells drilled while maintaining production from legacy wells.
The number of new wells added every year in the United States has fluctuated over the past decade. Although the number of new wells notably peaked at 13,745 in 2014, subsequent activity dipped before showing signs of returning in June 2016. The number of new wells fell by nearly 40% (4,829 wells) in 2020 to 7,147 because of the economic impact of the COVID-19 pandemic. Since then, the number of new crude oil wells has increased in every year at a slower pace compared with pre-pandemic rates. In 2022, the number of new crude oil wells was the same as in 2017. In the first half of 2023, drillers increased the number of new wells by 624 wells or 12% compared with the same period in 2022. This growth in the number of new wells indicates that growth in production is supported increasingly by increased productivity despite fewer operating drilling rigs compared with the past.
The United States became the global leader in crude oil production in 2018, surpassing Russia and Saudi Arabia, because of the substantial increase in crude oil output before 2016. By October 2023, after the economic disruptions resulting from the COVID-19 pandemic, the United States accounted for 16% of global crude oil production, the most recent month for which data are available.
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