U.S. Shale Growth Could Exceed Forecasts in 2024

• U.S. crude oil production has overwhelmingly exceeded earlier forecasts and has grown at a much faster pace this year.
• The U.S. is now producing more than 13 million barrels per day (bpd) of crude oil—more than any country ever.
• U.S. production growth is expected to continue into the new year.

U.S. crude oil production has overwhelmingly exceeded earlier forecasts and has grown at a much faster pace this year, offsetting much of the OPEC+ efforts to push up prices by coordinated supply reductions.  

U.S. production growth is expected to continue into the new year, thanks to further gains in efficiency and higher spending and production plans by the U.S. supermajors that have just announced megamerger deals.  

Some analysts predict that the U.S. oil output increase will slacken in 2024.

But others, including industry officials, see the estimates of production growth by the Energy Information Administration (EIA) as too conservative for 2024, and believe that U.S. shale production could top projections again.  

The U.S. is now producing more than 13 million barrels per day (bpd) of crude oil—more than any country ever—and is headed to a continued increase in the short and medium term. 

U.S. crude oil production hit a new monthly record of 13.236 million bpd in September, according to the latest available data from the EIA. Related: European Funds Face Forced Oil, Gas Divestment

"The growth has not just been a Permian story. We're seeing many shale basins that were flattish experiencing a revival," Francisco Blanch, Head of Global Commodities and Derivatives Research at BofA, said on a call to discuss the bank's energy outlook, as quoted by Reuters. 

Soaring production is also leading to surging exports of U.S. crude oil and petroleum products.

This year, U.S. crude oil production is set to average 12.93 million bpd and rise further to average 13.11 million bpd next year, the EIA said in its Short-Term Energy Outlook (STEO) in December. 

The some 200,000-bpd increase projected by the EIA is too conservative, according to Dan Eberhart, chief executive of Canary, a privately owned oilfield services company in the U.S.  

Eberhart doesn't believe that U.S. oil output growth would be limited to just 250,000 bpd next year.  

"It's more likely that America will keep marching toward an output of 15 million barrels a day before 2026, given the efficiency and productivity gains shale companies are delivering from assets in the flagship Permian Basin, along with smaller shale formations like the Bakken and Eagle Ford, as well as the offshore Gulf of Mexico," the executive wrote in Forbes this week.

OPEC itself acknowledged in its latest monthly report that U.S. oil production is soaring.  

OPEC noted in its report that "US crude and condensate production as well as NGL output continue to reach new highs. Total US liquids output reached a record 21.6 mb/d in September due to persistent outperformance of onshore and offshore production."

OPEC expects U.S. liquids supply to grow by 1.3 million bpd in 2023.

Next year, U.S. shale basins are set to account for about 48% of expected non-OPEC liquids supply growth of 1.4 million bpd in 2024, according to the cartel's latest projections. U.S. liquids supply growth is expected at 610,000 bpd next year—half the projected 1.3-million-bpd growth in 2023.

But U.S. oil output could surprise to the upside in 2024, just as it did in 2023.

The U.S. shale patch is now looking to do more with less as it seeks capital and operational efficiency to prove to shareholders that it has turned the page from growth at all costs to measured growth accompanied by higher returns to investors. 

The primary goals of large exploration and production firms in Texas and southern New Mexico for 2024 are to "acquire assets" and "reduce debt," according to executives polled in the latest Dallas Fed Energy Survey. Among small firms, the most-selected response was "grow production" (41% of respondents) followed by "maintain production" (25% of respondents), the survey showed.  

U.S. oil production growth will continue to upset OPEC's efforts to control oil prices, analysts say.

Shale output could upset the OPEC+ group's plans for 2024 again, Rebecca Babin, senior equity trader for CIBC Private Wealth, told CNBC last week.

"There's a lot of fear that no matter what OPEC does, no matter how much they cut, there are producers — non-OPEC producers — that are just going to fill the hole they keep digging."   

By Tsvetana Paraskova for Oilprice.com

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