BAKU, Azerbaijan, July 1. In 2028, US crude oil production is expected to reach 13.6 million barrels per day (mb/d), while achieving new record highs through 2027, Trend reports.
As the International Energy Agency (IEA) forecasts, this growth will driven by the rise in Light Tight Oil (LTO) extraction, predominantly from the Permian Basin.
The shale sector has reached a stage of financial maturity, resulting in a shift towards a more conservative growth trajectory. The focus now lies on disciplined investment, reducing leverage, and providing returns to shareholders. Reinvestment rates of 40-60 percent are anticipated in the medium term, in contrast to the previously observed rates of over 160 percent between 2015 and 2017, the agency noted.
Thus, between 2022 and 2028, US LTO production will see a growth of 2.1 mb/d, reaching 10 mb/d. However, conventional US onshore output is projected to decline by 550,000 b/d during the same period. On average, shale production maintains a growth rate of nearly 4 percent per year, with the Permian Basin contributing 80 percent of the increase. The majority of the gains occur early on, with 780,000 b/d of additions expected this year, gradually slowing down to just 170,000 b/d by 2028.
At the same time, the IEA pointed out that, while investment rates in US oil production have been on a path of recovery, it is unlikely that they will reach pre-COVID-19 levels. This is due to the fact that improvements in productivity have resulted in lower recovery costs from 2016 to 2022, the agency says.
However, current drillers may find little solace in this, as they face challenges such as soaring rig day rates, which have increased by over 50 percent in the past year. Additionally, there is a persistent scarcity of hydraulic fracking equipment (frack spreads), ongoing labor issues, and reduced well flow rates, all of which are putting pressure on the industry.