Despite the declining and stagnant rig count, US crude oil production managed to reach a monthly record high in August 2023, driven by productivity improvements and more efficient operations.
U.S. exploration and production companies are drilling longer laterals and deploying rigs in the most promising areas to get more bang for their buck.
New EIA data showed this week that U.S. field production of crude oil reached 404.6 million barrels in August, averaging 13.05 million barrels per day, well above U.S. drillers’ previous record set in July Exceeds 401.73 million barrels.
Production increases were observed in PADDs 1, 2, 3, and 4, with the largest percentage production increase occurring in PADD 4, which includes Colorado, Idaho, Montana, Utah, and Wyoming. The largest actual increase was in PADD 2, which includes North Dakota, Illinois and Kentucky, among others.
In Texas, the top oil-producing state, crude oil production reached a record 5.7 million barrels per day (bpd) in August, according to the latest monthly energy economic analysis from Texas Oil & Gas Association (TXOGA) chief economist Dean Foreman , emerges .
“Oil and natural gas production in Texas has reached records despite relatively modest drilling activity. “Productivity improvements and the use of wells that have already been drilled but not yet completed have provided tailwinds,” Foreman wrote in late September.
Producers in the Permian in Texas and New Mexico and the other shale plays have increased crude production despite a loss of 117 rigs this year, according to Baker Hughes data as of Oct. 27.
U.S. crude oil producers have been removing their rigs for most of the year, while the rig count largely stabilized in October.
Part of the production increases were due to the time lag between a significant change in oil prices and actual production – as Portal columnist John Kemp notes, “It takes about 12 months on average for a price change to be reflected in a change in production.” ”
However, the main reason for the production increases was greater efficiency in drilling and other operations.
The US shale oil company is now trying to do more with less by pursuing capital and operating efficiencies to prove to shareholders that it has turned the corner from growth at all costs to measured growth with higher returns for investors.
Oil and gas companies operating from the Permian to Marcellus shale plays are drilling deeper and deeper lateral wells because there are fewer rigs but longer wells.
Despite the loss of active rigs, shale companies are producing more oil and gas and have even exceeded some skeptical forecasts from earlier this year.
Between July and September, activity in the oil and gas sector increased in Texas, southern New Mexico and northern Louisiana, driven by the exploration and production (E&P) side of the business, oil and gas executives said in their response to the latest Dallas edition Fed Energy Survey.
Most executives, 84%, said they expect the number of U.S. oil rigs in six months to be near current levels, with 14% expecting a significantly higher number of oil rigs in six months and only 1% assumes the number will be much higher.
Despite expectations of a steady number of drilling rigs, crude oil production in the US is growing, albeit more slowly than before the pandemic. The Energy Information Administration (EIA) has slightly increased its estimates for American oil production in recent months.
In the latest Short-Term Energy Outlook (STEO), the government expects U.S. crude oil production to average 12.92 million bpd this year and 13.12 million bpd next year.
In the August outlook, the EIA noted that despite the declining rig count, “increased well productivity has offset the decline in active rig counts so far in 2023.”
“In 2024, we expect the number of active rigs to increase, which will help increase crude oil production in the second half of the year.”
By Tsvetana Paraskova for Oilprice.com
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