U.S. crude production to reach historic record high in 2018: EIA

Total U.S. crude oil production is forecast to reach an average of 9.9 million bbls/d in 2018, which would surpass the previous record of 9.6 million bbls/d set in 1970, according to the U.S. Energy Information Administration’s (EIA) latest Short-Term Energy Outlook.

In 2017, EIA expects an average of 9.3 million bbls/d in the U.S., up 0.5 million bbls/d from 2016.

Most of the production growth through to the end of 2018 will come continue to come from tight rock formations within the Permian region in Texas as well as from production in the Gulf of Mexico.

The Permian region is expected to produce 2.9 million bbls/d of crude oil by the end of 2018, about 0.5 million bbls/d more than the estimated June 2017 production level, representing nearly 30 per cent of total U.S. crude oil production in 2018.

The Permian region covers 53 million acres in the Permian Basin of western Texas and southeastern New Mexico.

It comprises smaller sub-basins such as the Midland Basin and the Delaware Basin, which contain historically prolific non-tight formations, as well as numerous prolific tight formations such as the Wolfcamp, Spraberry and Bone Spring.

The Permian’s size and stacked plays allow producers to drill through several tight oil layers and increase production even at sub-$50/bbl WTI oil prices, according to EIA.

Based on data from Baker Hughes, more than one-third of the 915 onshore rigs in the Lower 48 states in June were operating in the Permian region. EIA forecasts rig numbers to grow to 370 in the Permian by the end of 2018.

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