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US crude oil and natural gas output is set to notch fresh records in 2024 and 2025, the government has forecast, despite mounting fears that the shale revolution that fuelled the nation’s energy boom has run its course.
Average US oil production will amount to 13.2mn barrels per day this year, rising to 13.4mn b/d next year, according to an energy outlook released on Tuesday by the Energy Information Administration. The figures top the 12.9mn b/d estimated in 2023 — itself a record, surpassing levels reached before the Covid-19 pandemic.
Dry natural gas production, meanwhile, is set to rise to an unprecedented 105bn cubic feet per day in 2024 and 106bn cu ft/d in 2025.
The anticipated production levels underline the enduring impact of the shale revolution, which in the past 15 years has enabled the US to supply more oil and gas volumes than any country in history.
They also come during an administration less friendly to the oil and gas industry than its predecessor. President Joe Biden vowed on the campaign trail to lead a “transition from the oil industry”, and his administration has also placed restrictions on approving leases for oil and gas projects offshore and in Alaska.
“While production is up, it has nothing to do with anything that the Biden administration has pursued,” Mike Sommers, chief executive of the American Petroleum Institute, told the Financial Times.
Since taking office, Biden has called on producers to increase output to keep a lid on prices and told lawmakers last year that the country would need oil “for at least another decade”. Climate campaigners have blasted the administration as oil and gas production has reached new heights.
Production surged in 2023, taking many industry players and analysts by surprise and eclipsing early forecasts by the EIA, the government’s energy analysis agency. The increased supply helped to douse global oil prices despite efforts by Saudi Arabia and the Opec+ producer group to prop up the market through supply cuts.
Scott Sheffield, chief executive of Pioneer Natural Resources, the biggest producer in Texas, said in a December interview that last year’s increases meant there was a “good chance” output would now reach 15mn b/d within five years.
Yet the pace of oil production growth is set to slow in the coming years, as prime acreage runs low and Wall Street insists on shareholder returns over new drilling campaigns from energy companies.
Productivity gains at individual wells are being offset by fewer rigs placed in the field. Gas output growth will also decelerate as a result of a drop-off in production that comes as a byproduct of oil drilling in the Permian Basin, the vast field stretching between Texas and New Mexico.
Meanwhile, US exports of liquefied natural gas — which have boomed since the first cargo from the Gulf of Mexico set sail in 2016 — will continue to grow as more export facilities come online, EIA forecast. Exports equivalent to 11.8bn cu ft/d in 2023 should rise to 12.4bn cu ft/d in 2024 and 14.4bn cu ft/d in 2025.
Sommers said the industry was concerned about delays to export licence approvals for new US LNG plants and rumours that the administration is considering placing a moratorium on new export permits.
He accused the administration of “sowing the seeds of a future energy crisis” by imposing severe restrictions on approving oil and gas leases.
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