EIA: U.S. Breaks Worldwide Oil Production Records

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Pushing against supply chain issues, ESG investment concerns, pipeline approval constraints and other headwinds, U.S. domestic oil production, including condensates, has continued to set records over the last six years, according to the U.S. Energy Information Administration (EIA).

Condensates include hydrocarbons like propane, butane and others that occur as vapor in natural gas but can be transformed easily into liquids at relatively low pressures. "Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (BBL/d) in 2023, breaking the previous U.S. and global record of 12.3 million BBL/d, set in 2019," according to the EIA. "Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million BBL/d."

The EIA says the trend is likely to continue: "The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term, because no other country has reached production capacity of 13 million BBL/d. Saudi Arabia's state-owned Saudi Aramco recently scrapped plans to increase production capacity to 13 million BBL/d by 2027."

Together, the U.S. and Saudi Arabia accounted for about 40% of the world's oil production in 2023.

Before the shale and hydraulic fracturing revolution that began around 2008, these numbers would have been unthinkable. U.S. oil production had peaked in 1970 at 9.6 million BBL/d, reaching a nadir of 500,000 BBL/d in 2008.

After topping out at 9.6 million BBL/d in 1970, annual U.S. crude oil production flattened and then generally declined for decades to a low of 5 million BBL/d in 2008.

While several U.S. fields boomed during the shale resurrection, including the Bakken in North Dakota, the Eagle Ford in south Texas and SCOOP/STACK in Oklahoma, the Permian Basin of West Texas and southeastern New Mexico has led the charge. The Permian became the world's single most productive field around 2019, although exact numbers from the Saudi Ghawar Field are rarely released. Ghawar's last known numbers were released in 2019, at 3.8 million BBL/d. With subsequent Saudi production cuts, analysts feel it is unlikely that the field's production has increased significantly, if at all, since then.

On the other hand, the Permian itself has continued to set production records since late 2022, finishing 2023 at 6.1 million BBL/d. Midstream operator Plains All American Pipeline LP (NASDAQ:PAA) (Houston, Texas) has predicted that the basin will reach 6.4 million BBL/d by the end of 2024, as greater efficiencies in drilling and completions have boosted per-well output, overriding expectations of a steady rig count.

M&A Not Stopping the Train
Will the recent surge in mergers and acquisitions (M&A) reduce the oil supply and raise prices for gasoline and other crude products? Recent history and oil patch prognosticators would say no, although a group of Democratic lawmakers have enjoined the U.S. Federal Trade Commission (FTC) to investigate recent M&As in light of monopoly issues.

Ironically, some of the earliest antitrust legislation 100+ years ago was directed at breaking up oil monopolies, including Standard Oil. But in today's global economy, the power of any one company or aggregation of companies would seem to be diluted greatly by the total amount of oil produced and the aggregation of world oil markets.

The EIA reports that 2023 daily oil production averaged 101.7 million barrels per day. In the U.S., for Lower 48 production only, Enverus' (Austin, Texas) Justin Lepore lists the top U.S. producers and their daily averages as (numbers include recently announced M&As, in average BBL/d over 2023):

• ExxonMobil (NYSE:XOM): 1,998,855
• Chevron (NYSE:CVX): 1,402,451
• Occidental Petroleum (NYSE:OXY): 1,367,866
• EOG Resources (NYSE:EOG): 1,130,634
• Total: 5,899,806

The total of the nation's top four producers is just less than 6 million BBL/d, which is less than 6% of the world's daily total production. Assuming anything short of all four of them completely stopping production, this would not seem to be a likely scenario for recent M&A activity to have the power to materially affect consumer gasoline or diesel prices.

Exports Rising
The U.S. became a net exporter of petroleum and refined products in 2020, for the first time since 1949, according to EIA figures. Imports peaked in 2005, again showing the transformative effects of the shale and fracturing revolution. In 2023, the EIA's Annual Energy Outlook predicted this situation would continue through 2050.

December 2023 also saw the U.S. break records for propane exports, reaching 1.9 million BBL/d that month. The nation exports more of this natural gas liquid (NGL) than it consumes. Exports to Asia grew 25% in 2023 from 2022, with trade to China rising 49% in 2023. Japan and South Korea are the nation's other top Asian customers for propane.

The reality remains that certain legislation or regulation could change all this, but so far consumer demand seems to have kept the oil industry in business.

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) platform 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 more than 200,000 current and future projects worth $17.8 trillion (USD).