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If you're not concerned about the rate at which U.S. crude oil production could grow this year, you should be, ConocoPhillips Chief executive Officer Ryan Lance said on a conference call on Thursday, according to Bloomberg.
U.S. crude oil production has grown from 11 million bpd at the beginning of 2021 to 11.7 million bpd at the beginning of 2022. But production in the United States could see sharper growth this year, Lance noted.
According to Lance, U.S. crude oil production could grow by as much as 900,000 bpd over the course of 2022—this is an increase of 100,000 bpd from Lance's previous estimate.
This rate of crude oil production growth could cause worry, despite the current tight market.
"If you're not worried about it you should be.," Lance said.
One need only to look at the U.S.-based oil production plans from some of the largest oil companies. Earlier this week, Exxon and Chevron divulged their 2022 plans that detailed aggressive production increases—particularly in the Permian basin.
Exxon has plans to increase oil production in the Permian by 25% this year. Chevron, for its part, expects its production to increase 10%.
The Energy Information Administration agrees that oil production in the United States is poised for a surge—after already reaching a new record. According to the EIA, crude production in the Permian shale play averaged 4.92 million bpd in December, and was set to increase to 4.996 million bpd in January and 5.076 million bpd in February. If the Permian basin were an OPEC member, this level of production would make it OPEC's second-largest producer.
IHS Markit noted that this year's higher oil prices would enable many oil producers to not only return cash to shareholders, but also to ramp up production—unlike in 2020 and 2021.
But contrary to ConocoPhillips' warning, not everyone is concerned that the United States will be able to ramp up production enough to bring down crude prices. Earlier this week, Bloomberg quoted Elisabeth Murphy from ESAI Energy as saying, "U.S. production may surprise to the upside this year, but not by so much that it will significantly bring down oil prices."
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.