EIA forecasts record-high for crude oil production in 2018

According to a recently-published short-term energy outlook published by the U.S. Energy Information Administration (EIA), crude oil production is forecast to average 9.3 million barrels per day in 2017 and average 9.9 million b/d, surpassing the previous record high for production of 9.6 million b/d set in 1970.

The outlook noted that most of the growth in U.S. crude oil production through the end of 2018 will come from rock formations within Texas’ Permian region and from the Federal Gulf of Mexico.

For the Texas Permian region, which spans 53 million acres, the area is expected to produce 2.9 million b/d of crude oil by the end of next year, which represents approximately 30 percent of the total U.S. crude oil production throughout 2018.

According to Baker Hughes, an oilfield services company based in Houston, 366 of the continental United States’ 915 onshore rigs were operating in the Permian region. However, according to EIA estimates the figure is expected to fall to 345 by the end of the year and then rise to 370 by the end of 2018.

Another EIA publication, the Drilling Productivity Report, stated that productivity in the Permian region as measured by new well production per rig in barrels per day, decreased for the 10th consecutive month in June.

The decrease, the report said, was likely caused by rig operators who are drilling more wells than they are completing. While it remains unknown why operators are drilling more wells than they complete, a widening of the West Texas Intermediate (WTI)-Midland crude oil price discount to WTI-Cushing from the beginning of the year could mean that there were minor transportation constraints.