Days After Officially Breaking Monthly Production Record, U.S. Oil Output Forecast to Surge 20 Percent By 2023
Revised data from the U.S. Energy Information Administration (EIA) shows American oil production officially surpassed a 47-year-old record of 10.044 million barrels per day (b/d) last November, as U.S. output hit 10.057 million b/d. Compounding this incredible feat is Monday’s news that the International Energy Agency (IEA) forecasts that the U.S. will overtake Russia as the world’s top oil producer by 2023, seeing production reach 12.1 million b/d in 2023 — a 20 percent increase from current record levels.
The IEA also predicts petroleum liquids production (crude oil and natural gas liquids) will increase by nearly 4 million b/d over the next five years, forecasting domestic liquids production reaching 17 million b/d by 2023.
As the U.S. breaks production records left and right, it’s important to acknowledge integral role technology has played in oil development over the past decade, with advances such as hydraulic fracturing and horizontal drilling helping drive unprecedented production growth over such a short period of time.
There’s been no shortage of stories touting the strength of U.S. oil production of late, as reports of domestic output toping 10 million b/d for the first time since the 1970s were soon followed with estimates of record oil production being reached in January. Now, as 2017 production levels come into greater focus, it’s clear the United States reached an all-time oil production record sooner than expected. Revising the previous estimate of 10.038 million b/d – just 6,000 barrels shy of a record – for November 2017, the latest data now prove that month’s production surpassed the record to reach 10.057 million b/d.
EIA pointed out just how vital cutting-edge shale development technology has been to reach this monumental level of production, stating:
“U.S. crude oil production has increased significantly over the past 10 years, driven mainly by production from tight rock formations including shale and other fine-grained rock using horizontal drilling and hydraulic fracturing to improve efficiency.”
Indeed, these technologies are expected to become that much more important, as EIA estimates production from shale to account for a greater percentage of total production over the next several decades. According to the agency’s Annual Energy Outlook 2018, production from U.S. shale regions will increase through the early 2040s, surpassing 8.2 million b/d while making up almost 70 percent of total U.S. production – up from 54 percent in 2017.
U.S. Dominance in Global Market
Amplifying news of the U.S. oil production record officially being broken, the Oil 2018 report from IEA published Monday further solidifies America’s role as a global energy powerhouse. According to the report, the United States, along with Canada and Norway are expected to see the largest jump in oil production growth over the next five years. That said, U.S. production is predicted to vastly outpace these other countries. Domestic production growth is forecast to be over 3.5 times larger than growth from the next largest country, Brazil, accounting for 60 percent of overall global production growth.
This dominance by the United States in supply growth is summed up nicely by IEA’s Executive Director Dr. Fatih Birol, who stated:
“The United States is set to put its stamp on global oil markets for the next five years.”
With IEA’s forecast analyzing total U.S. liquids production (crude oil and natural gas liquids), factors such as the burgeoning U.S. petrochemical industry and increasing Chinese economic growth are prompting global oil demand to grow by roughly 6.9 million b/d by 2023. Thankfully, American oil production growth will nearly 80 percent of this projected demand increase, as IEA estimated U.S. total liquids output to reach 17 million b/d by 2023 – up about 29 percent from 2017 levels. Much of this growth will come from the Permian Basin, according to IEA, as the agency sees Permian output doubling by 2023.
Accompanying surging production, IEA also projects U.S. oil exports to rise significantly. New investment in pipeline and export infrastructure, especially along the Gulf Coast, means the United States will experience an ease in supply chain bottlenecks and realize greater exports. In fact, IEA estimates U.S. crude export capacity to reach almost 5 million b/d by 2020 with the Port of Corpus Christi as a strategic North American crude oil outlet. To put this in perspective, current export capacity is less than 2 million b/d.
With current record production forecast to rise even further thanks to advances in shale development, coupled with expanding export infrastructure, the United States is poised to become a top player in the global oil market.