What happens if U.S. oil production peaks?

[dan_s]

"Last week, Morgan Stanley analysts lowered their estimate for U.S. oil output
this year and raised their forecast for Brent crude to a range of $80 to $85 a
barrel, from $75 to $80." - -Wall Street Journal 2-19-2024

Private companies such as Endeavor have been the country’s swing producers in
recent years, boosting production when prices are high and cutting back when
they fall. Ten private producers, including Endeavor, accounted for half the
Permian Basin’s production increase between December 2019 and March 2023,
according to S&P Global Commodity Insights.

The Permian Basin, which straddles West Texas and Southeast New Mexico, has
accounted for nearly all the country’s oil output growth since the pandemic. Last
year, the U.S. produced an estimated 12.9 million barrels of oil a day, which would
be a record high and more than any other country.

But the number of oil rigs operating in the U.S. has dropped nearly 20% since the
end of 2022 to about 500, according to oil-field services firm Baker Hughes.
The decline signals a huge deceleration in growth could be coming, since so
many wells have been drilled recently and because a shale well’s output declines
most rapidly early in its life, said Standard Chartered’s Horsnell.

Thirty-nine private exploration and production companies were also acquired by
public companies in 2023, according to analytics firm Enverus. That includes
four of the big 10 that powered the Permian’s postpandemic comeback.

Dealmaking mania has depleted the country’s supply of untapped wells.
Companies looking to sell themselves often frack previously drilled wells to
boost output and appear more attractive to buyers. Hess, for example,
dramatically ramped up fracking in North Dakota’s Bakken region before its
takeover by Chevron was announced in October, according to research firm
Energy Aspects