8/12/2023 0 Comments Us oil production 2022![]() ![]() Along with commodity price volatility, the growth for growth’s sake dynamic put energy stocks in the penalty box for many years. Public exploration and production companies (E&Ps) have committed to capital discipline with modest growth after years of destroying value by growing production too aggressively. Why isn’t US oil production growing more at today’s high prices?ĭespite ample reserves, significant industry expertise in shale production, and financial incentive from higher oil prices, US oil production is only growing modestly for several reasons. ![]() Production is expected to achieve a new annual high in 2023 as shown in the chart below, but monthly production is forecast to only reach 12.6 MMBpd in December 2023. The latest monthly production numbers from August came in at 12.0 MMBpd – still well off the prior high but up 0.7 MMBpd from August 2021. Annual production was essentially flat in 2021, but volumes have increased in 2022 with higher prices. Production reached an all-time monthly high of 13.0 MMBpd in November 2019 before collapsing to just 9.7 MMBpd six months later in the wake of the pandemic and oil’s price crash. In the years leading up to the pandemic, US oil production saw a meteoric rise, with annual output growing by about 3.0 million barrels per day (MMBpd) from 2017 to 2019 as shown below. Perhaps it goes without saying, but the price spike this year in the wake of Russia’s invasion of Ukraine would have been much more severe if not for the significant oil production from the US. The transformation of the US into a major oil producer and exporter within a period of ten years is truly remarkable. US oil production: heydays of growth give way to moderation. Today’s note digs into US oil production trends, the factors limiting growth, and how this is arguably a good thing for energy infrastructure companies. Why is US oil production not growing more? This is a question that has confounded many people from politicians in Washington to anyone that has experienced sticker shock at fuel pumps this year. Prices are much higher today, which should be a greater incentive for ramping output, but US production is growing moderately. The US saw tremendous growth in oil production from 2017 to 2019 when oil prices were lackluster. For energy infrastructure corporations and MLPs, modest US production growth is arguably a goldilocks (or just right) scenario as it requires moderate capital spending and supports ongoing free cash flow generation. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |