U.S. Oil Production Growth has stopped

[dan_s]

Why is this happening?
> Simple answer: We aren't completing enough new wells to offset the natural declines in all wells online.
> Every oilfield ever discovered eventually peaks and then goes on steady decline. This rule applies to shale plays also known as Light Tight Oil. (LTO)
> The Permian Basin is only major LTO oil basin in the U.S. that has yet to peak. It cannot offset declines in the Bakken and Eagle Ford at the current active drilling rig count.
> This is a big part of The Big Paradigm Shift that is in the first inning of the tightening of the global oil market.

U.S. oil and gas production growth rates are slowing, slowly
22V Research: July 18, 2023

The inventory of drilled but uncompleted (DUC) wells in the seven U.S. shale basins fell to 4,804 in June, according to data published yesterday by the U.S. Energy Information Administration (EIA). This is the lowest level since May 2014 and may mark a trough for 2023. Well completions fell below 1,000 in June for the first time since July 2022. Completions tallied to 957, or 9% below the trailing 12-month average. The ratio between these two figures is a useful metric for assessing the pace of the slowdown in oil and gas production growth in the United States (Rabbit or DUC?, 28-Jun-2023). A higher number means slower production growth. In June, the ratio of DUCs to completions increased for the third consecutive month to reach 5.0. This ratio is now at its highest level since July 2022. In prior supply adjustment cycles over the past decade, this ratio peaked at 10.5 (March 2016) and 34.3 (June 2020). We expect it to rise toward the 2016 peak rather than the extreme number registered during the pandemic.

Based on the well data, EIA estimates that U.S. light tight oil (LTO) production is making a near-term top now at 9.42 million b/d and will fall modestly to 9.40 million b/d in August. To put these numbers in context, US LTO production first exceeded 9 million b/d in October 2019, reached 9.289 million b/d in December 2019 and then fell to 6.673 million b/d by February 2021 as supply responded to the COVID-driven collapse in demand. Production subsequently rebounded on the economy’s reopening and again surpassed the 9 million b/d threshold in October 2022. Current LTO production is the highest ever, up +732 thousand b/d YoY (+8.4%). About sixty two percent of this growth comes from the Permian: +455 thousand b/d YoY (+8.6%).

Total liquids production in the United States, which includes natural gas liquids and biofuels, reached 21.36 million b/d in 2Q2023 for a gain of +1.24 million b/d (+6.2%). That growth alone is larger than the total crude oil output of eight of the thirteen OPEC countries.