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EIA Revises Permian Oil Outlook

Oil production in the Permian has grown over the past four months and will continue growing until the end of the year.

This is according to the latest production estimates by the Energy Information Administration, which had forecast output declines in the Permian for the last four months.

Now, the agency has revised its forecast, expecting continual growth. In November alone, oil production in the Permian is seen rising to 5.981 million barrels daily, from 5.976 million bpd in October.

At the same time, total shale oil output is set to fall in November and December, the EIA also predicted. The November average is seen at 9.653 million bpd and the December average at 9.652 million bpd. The EIA sees production falling in the Anadarko, Appalachia, and Eagle Ford basins.

Drilling in the Permian has been on the decline for a good part of this year, possibly motivating the EIA’s forecasts of declines in production. Yet the industry has been reporting efficiency gains in drilling, meaning some companies have been getting more oil out of the ground with less drilling.

The clearest sign yet that the Permian remains a magnet for the oil industry was Exxon’s acquisition of Pioneer Natural Resources, which turned the supermajor into the biggest player in the basin.

Exxon paid $58 billion for Pioneer to lock in additional acreage in the Permian. Consolidation has turned into the preferred method of expanding in the shale patch as sector players run out of untapped resources.

Pioneer itself grew through acquisitions during the past few years, buying Parsley Energy for over $7 billion in 2020 and DoublePoint Energy for over 6 billion in 2021.

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Meanwhile, Occidental’s CEO, Vicki Hollub, said recently that oil production in the Permian will continue to grow over the next few years, addressing concerns of analysts that the star shale play may be on its way to peaking.

By Irina Slav for Oilprice.com

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