Production will still continue to grow as rig efficiency and well-level productivity rise, offsetting the decline in the number of rigs until drilling activity accelerates in 2021. That year, production is forecast to 13.7 million b/d.
In the Lower 48 states, crude oil and associated gas production has a relatively short investment cycle. Output alterations typically follow changes prices and rig counts with about a four- to six-month lag.
The West Texas Intermediate (WTI) crude oil price forecast in the January 2020 Short-Term Energy Outlook (STEO) rises from an average of $57 per barrel in 2019 to an average of $59/b in 2020 and $62/b in 2021.
Permian and Bakken Shale to lead growth
North America is likely to witness the highest growth through 2024 due to growing investment in unconventional oil and gas facilities. The U.S. Energy Information Administration (EIA) forecasts that U.S. crude oil production will average 13.3 million barrels per day (b/d) in 2020, a 9% increase from 2019 production levels, and 13.7 million b/d in 2021, a 3% increase from 2020.
The Permian region, spanning across western Texas and eastern New Mexico, remains the most prolific crude oil production growth region in the United States. Favorable geology, combined with technological improvements, has contributed to the Permian region’s high returns on investment and years of remaining oil production growth potential.
Permian crude oil production is seen average 5.2 million b/d in 2020, an increase of 0.8 million b/d from 2019 production levels. For 2021, the Permian region will produce an average of 5.6 million b/d. The Bakken region in North Dakota, meanwhile, is singled out as second-largest growth area in 2020 and 2021, growing by about 0.1 million b/d in each year.