The days of exploding US shale oil production are over. U.S. oil production is rising, but at a much slower pace than before the 2020 crash and lower than expected a few months ago.
New priorities for the shale patch, capital discipline and a focus on returning profits to shareholders and repaying debt, combined with supply chain constraints and rising costs, are holding back U.S. oil production growth.
The Biden administration’s various signals to the U.S. oil and gas industry, frequently blaming high gasoline prices and, most recently, the threat of tax increases, are also unmotivating U.S. producers. Without a medium- to long-term vision of how U.S. oil and gas resources can be used to strengthen U.S. energy security and support import-dependent Western allies, many Reluctance to commit to increasing spending on drilling.
Oil production growth forecasts downgraded
This year, the U.S. Energy Information Administration (EIA) and various analysts have lowered their forecasts for crude oil production in 2022 and 2023. Forecast for this year.
Oil company executives say U.S. government policies and anti-oil rhetoric, inflation, contractor time delays and regulatory uncertainty are hurting drilling and production plans.
The EIA expects U.S. crude oil production to average 11.7 million barrels per day (bpd) in 2022 and 12.4 million bpd in 2023, surpassing the record high set in 2019. expected. Short-term energy outlook.
The EIA has cut the value several times so far for 2022, despite expectations for record production next year. According to calculations, the latest reduction is a significant 21% reduction in growth projections. Reuters.
In October weatherThe EIA had already lowered its forecast for average production in 2023 to 12.4 million bpd from the September forecast of 12.6 million bpd.
“The decline in oil production in the forecast reflects lower oil prices in the fourth quarter of 2022 than previously expected,” the government said in October.
Weeks before Russia’s invasion of Ukraine upended global energy markets, Enverus Intelligence Research Be expected US oil production growth will accelerate to over 900,000 bpd in 2022.
However, inflation and supply chain delays since the second quarter have significantly dampened the outlook for US oil production growth. Emberus Intelligence Research (EIR) cut This month’s forecast for US production growth is due to “headwinds from restricted oilfield services, recession risks and underperformance of recently drilled wells in the Permian Basin.”
Lower 48 oil production forecasts have therefore been significantly lowered and the EIR now expects exit-to-exit growth of around 450,000 bpd in 2022 and 560,000 bpd in 2023.
‘OPEC back in the driver’s seat’
Top industry executives said last week that the US shale patch was no longer a swing oil producer and that OPEC had returned as the most important driver of oil supply fundamentals.
“Cher was thought to be the swing producer, but Saudi Arabia and OPEC were waiting for this. Now OPEC is back in the driver’s seat of being the swing producer,” said John Hess, CEO of Hess Corp. Said At a conference in Miami last week.
Executives say U.S. oil production will drop in the next few years as investors put pressure on U.S. oil companies to focus on returning money to shareholders instead of investing in aggressive growth strategies. We expect it to average 13 million bpd and level off.
The current state and outlook for the U.S. oil industry are in stark contrast to the decade of growth to 2019.
Between 2009 and 2019, U.S. producers captured all incremental consumption in three of the ten years, and at least two-thirds of incremental consumption in six of those years. Estimate Reuters senior market analyst John Kemp.
“U.S. liquids production will grow by 10 million b/d from 2011 to 2022, capturing an incredible 10% of global supply in the process,” said Wood Mackenzie. Said last month. Nearly 6 million bpd of that increase came from 48 Lower 48 crude oil and condensate production, with two-thirds coming from the Permian Basin alone, with the remainder coming from natural gas produced from shale gas play. Liquid.
U.S. oil and gas production has continued to rise this year, but that growth has been capped by cost pressures and supply chain delays, executives said in a report. Dallas Fed Energy Survey Third quarter. The shale patch cites labor and equipment shortages, as well as the Biden administration’s inconsistent policies, as major obstacles to expanding drilling activity.
“The government’s lack of understanding of the oil and gas investment cycle continues to lead to inconsistent energy policies and contributes to rising energy costs. We will reduce our investment in infrastructure,” said an executive at an oilfield services company. comment to investigate.
“We are in an energy death spiral that leads to rising highs and falling lows.
By Tsvetana Paraskova for Oilprice.com
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