Now that 2022 is behind us, we can review the final numbers for U.S. oil production. The Energy Information Administration (EIA) publishes these numbers, but they are usually two months behind. As such, as I write this they have only reported the monthly oil production numbers through September.
Nevertheless, the EIA reports weekly numbers and the four-week average in its Weekly Petroleum Status Report. We can use the four-week averages for November and December to fill in those monthly gaps and get a close estimate of total oil production in 2022.
The final number may change slightly in the final reporting, but it would be a small change that doesn’t impact the conclusion that 2022 was the second-highest oil production on record.
The yearly record thus far is 2019, when annual production reached 12.3 million barrels per day (bpd). If not for the Covid-19 pandemic, 2020 would have probably been higher as the monthly numbers reached 12.9 million bpd just before the pandemic impacted production. But by May 2020, oil production had plunged to 9.7 million bpd, and then began a slow recovery. That dragged the 2020 average down to 11.3 million bpd.
Although monthly numbers continued to recover into 2021, the annual average still came in slightly below 2020’s number at 11.25 million bpd. But there was a decent bounce in 2022 to reach 11.85 million bpd.
Barring one of those geopolitical events that seem all too common in recent years, 2023 oil production should come in ahead of 2022 production. However, the rate of increase is likely to be more like that of 2021-2022 than the very high production increases seen during the Obama and Trump Administrations.
According to the Baker Hughes Rig Count data, at the end of 2022 there were 620 rigs drilling for oil. That was an increase of 140 rigs (29%) from the end of 2021, and nearly back to the ~680 rig level in the months preceding the start of the Covid-19 pandemic in 2020. However, that is still a far cry from the levels of 2014, when the rig count briefly exceeded 1,600.
Nevertheless, the 2019 record could be broken in 2023. It will be close. The second half of 2022 saw production levels right at the record level of 2019, and production did increase by half a million barrels per day during that period. If that trend continues into 2023, we may see a new oil production record.
By Robert Rapier via rrapier.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- Oil Prices Head Lower As Traders Take Profits
- Global LNG Imports Hit A Record High In 2022
- Why Oil’s 7-Month Downturn May Be About To Reverse
Moreover, there is a difference of more than 1.0 million barrels a day (mbd) between the EIA’s weekly and monthly figures. The EIA seems to work on the assumption that if its weekly figures were hyped, by the time the monthly figures are published, people would have forgotten the EIA’s initial hyped figures.
US shale oil is a spent force. It has never recovered since it was decimated by the pandemic in 2020. Since then there has been frequent projections about a rise of shale oil production and a multitude of excuses why there has been none. 2023 will be no exception.
The reason has less to do with the most often mentioned excuse, namely capital discipline and overwhelmingly far more to do with the fact that the sweet and lucrative spots in the shale plays have already been exhausted forcing drillers to move to poorer and more costly to produce spots thus leading to a rise in production costs and declining production.
My projection of US oil production in 2023 is no more than 9.8-10.3 mbd.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert