EIA: U.S. Could See Record Crude Oil Production in 2023 and 2024

Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. crude oil production could reach record levels in 2023 and 2024, according to a recent forecast by the U.S. Energy Information Administration (EIA), largely driven by production growth in the Permian Basin and offshore Gulf of Mexico (GOM).

According to its January Short Term Energy Outlook, the EIA forecasts production to average 12.4 million barrels per day (BBL/d) in 2023 and 12.8 million BBL/d in 2024--up from a projected 12.3 million in 2022. The EIA's forecast is based on "expectations of crude oil prices and infrastructure capacity additions."

The agency said it expects West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, will average $77 per barrel in 2023 and $72 per barrel in 2024--down from $95 in 2022--however, "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 [barrel] to $54/b."

The EIA is forecasting 2023 production in the Permian will increase by 470,000 BBL/d, to average 5.7 million BBL/d, as the "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." For more information on natural gas-pipeline project activity in the Permian, see Industrial Info's August 9, 2022, article - New Natural Gas Pipelines Spring Forth from Permian.

For offshore Gulf of Mexico, the EIA expects 2023 production to increase by 350,000 BBL/d.

For 2024, meanwhile, Permian production would increase by 350,000 BBL/d; GOM production would decline slightly.

Industrial Info is tracking oil and gas drilling projects that support the EIA's forecast, although upstream companies and economists at the Organization of Petroleum Exporting Countries (OPEC) have a more mixed outlook on the future of U.S. crude oil production. For more information, see January 24, 2023, article - U.S. Oil Potential Is High, but the Future Is Uncertain.

Industrial Info is tracking $38.7 billion worth of active onshore and offshore crude oil-production projects in the U.S., including Alaska and the deepwater Gulf of Mexico. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here for a full list of detailed project reports.

In the first quarter, Ovintiv Incorporated (NYSE:OVV) (Calgary, Alberta), formerly known as Encana, expects to begin drilling between 30 and 45 new wells at each of two locations in the Permian Basin: the Nichols A lease north of Karnes City and the Wessendorff lease east of Karnes City. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can read detailed reports on the Nichols A and Wessendorff projects.

In the Gulf of Mexico, Chevron Corporation (NYSE:CVX) (San Ramon, California) expects to finish construction in mid-2023 on its Jack/St. Malo exploration project, where the company is drilling five wells, including two for production and three for water injection; installing subsea infrastructure; and modifying the existing platform to include a water-injection module.

Chevron believes these additions will add 175 million barrels of oil-equivalent to production. For more information, see Industrial Info's project reports on the wells, subsea infrastructure and topsides modifications.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).