U.S. production reaches 12.0 MMbopd for a new record

Somewhat to its own surprise, the U.S. Energy Information Administration (EIA) estimates that U.S. crude oil production averaged 12.0 MMbpd in January, up 90,000 bpd from December 2018’s level, and setting yet another all-time U.S. oil output record. This breaks the previous record of 11.91 MMbopd set in December.

By Kurt Abraham

The rapidity with which U.S. oil output has grown seems to have caught EIA by surprise. Last November, EIA had estimated that U.S. production would exceed the 12-MMbopd mark during second-quarter 2019. And, in fact, even-earlier EIA forecasts had called for the 12-MMbopd threshold to be surpassed only in the fourth quarter of this year.

A new set of output forecasts. Now, with three additional months of track record available, EIA now forecasts U.S. crude oil production to average 12.4 MMbpd in 2019 and 13.2 MMbpd in 2020, with most of the growth coming from the Permian region of Texas and New Mexico. If realized, both of these forecast levels would easily surpass the record-high annual average of 11.0 MMbpd set in 2018, ensuring that the U.S. remains the world’s largest crude oil producer.

Overall, U.S. oil production increases are largely the result of continued production growth in the tight-oil formations of the Permian region, as well as the expectation that 19 new projects will start during 2019 and 2020 in the federal offshore Gulf of Mexico (GOM).

“Favorable geology, combined with technological improvements, has contributed to the Permian region becoming one of the more economic regions for crude oil production in the United States,” explained the agency. EIA forecasts that Permian production will average 4.2 MMbopd in 2019, a 750,000-bopd increase from 2018, and 4.7 MMbopd in 2020, a 530,000-bopd gain over 2019’s level. Despite pipeline capacity constraints, the Permian region’s month-over-month growth averaged nearly 100,000 bopd for nearly all of 2018, exceeding EIA’s expectations, as expressed in monthly Short-Term Energy Outlook (STEO) revisions. READ THE REST OF THE ARTICLE HERE