In a recent estimate released by the U.S. Energy Information Administration (EIA), crude oil production in the United States reached a remarkable average of 13.3 million barrels per day (B/D) in December, marking both a global and U.S. record. This figure, surpassing the pre-COVID-19 pandemic peak in November 2019 by approximately 300,000 B/D, underscores the resilience and growth of the nation’s oil production sector.
Traditionally, the number of newly drilled wells played a pivotal role in driving production growth. However, the EIA suggests that this dynamic has evolved, attributing the recent surge in production to advancements in drilling and hydraulic fracturing technologies. These innovations not only enhance well productivity but have also contributed to the stabilization of output from existing wells since 2021.
Although the report did not delve into specific technologies fueling this growth, a noteworthy trend in the U.S. shale sector is the shift towards 3-mile lateral wells. These longer wells not only reduce operational costs but also lead to a decrease in the number of 2-mile lateral wells that operators would typically drill.
Highlighting historical data, the EIA pointed out that the peak year for new wells was 2014, totaling 13,745, with an average production of 8.7 million B/D. The pandemic-induced economic slowdown in 2020 saw a significant drop in new wells drilled to 7,147. While drilling activities have gradually increased since, with nearly 8,000 wells in 2021 and close to 10,000 in 2022, the recovery has been slower compared to previous years.
The EIA emphasized a shift in the significance of rig count as an indicator, noting that despite a nearly 70% decrease in active rigs over the past decade, productivity growth has remained unaffected. The final U.S. rig count for 2023 indicated 602 onshore rigs (including 565 horizontal rigs) and 20 offshore rigs in operation, according to data from Baker Hughes.
Despite the upward trajectory over the past three years, the EIA anticipates a temporary dip in production due to winter weather-related shutdowns in February. The administration projects a decline in production throughout much of the year, with expectations of a resurgence in the fourth quarter, setting the stage for new production records in 2025.