The United States’ (US) oil production outlook is set to grow over the next five years from 10.96 million barrels per day (mmbd) in the beginning of 2021 and reach more than 12.9 mmbd by 2030. The biggest growth is expected to happen in the Permian Basin, where crude oil and condensate supply is projected to increase by almost 0.90 mmbd from 4.5 mmbd in 2021 to 5.4 mmbd by the end of the outlook period, according to GlobalData, a leading data and analytic company.
According to GlobalData’s latest report, ‘Unconventional Production in the US Lower 48, H1-2021’, US Lower 48 operators were able to reach significant drilling and completion improvements in the past year, lowering break-even price of unconventional projects to as low as US$35 per barrel, making shale production in the country to rebound to pre-pandemic levels by 2024
Svetlana Doh, Oil & Gas Analyst at GlobalData, comments: “Despite the significant increase in oil prices, operators have been quite prudent in their capital spending and started building their strategies around high-return core assets. As a result, total rig count in the US has been quite sluggish in response to an increase in WTI price and is still at 63% level compared to the number of rigs before the pandemic started.
“The US oil and gas rig count has been growing steadily during H1 2021, however, it is down by 29% annually. An average of 327 rigs were active across the US shale plays during H1 2021, which is 132 rigs lower compared to H1 2020. However, the recent oil price recovery has facilitated the improvement in rig activity and in January, 332 rigs were operational across major shale plays, which increased to 418 in June 2021.”
Doh adds: “Future production in the US Lower 48 is also likely to be affected by the fact that President Biden’s administration will try to constrain leasing on the federal land, even though the drilling freeze was lifted by the court’s ruling earlier this year.
“Such a measure is making the process of leasing time consuming and this alone could hurt operators with significant acreage on federal land in the long run. However, the overall effect on production is not expected to be immediate. Operators have been stocking up drilling permits in advance, and secondly, drilling will still be allowed on active but not expired federal leases.”