U.S. Energy Information Administration recently said crude oil production continues to increase in the lower 48 states despite fewer active drilling rigs because of gains in operational efficiency. EIA said last month, “Improved performance is particularly evident in the Permian region, where we observed a nine percent year-over-year increase in November.” At the end of last year, there were 589 rigs in U.S. (down 32 or 5 percent in the past year) and 304 rigs in Permian Basin (down 7 or 2 percent in the past year).
EIA said, “Oil and natural gas companies are increasingly leveraging technologies – including artificial intelligence, electronic hydraulic fracturing technologies, and automated drilling processes – to optimize operations while operating fewer rigs. This shift toward digital solutions has improved drilling and completion techniques and reduced rig downtime, and it provides advanced analytics to help target future operations.”
EIA expects crude oil production to increase by an average of 260,000 barrels per day from 2024 to a record high of 11.3 million b/d in 2025. Additional pipeline capacity coming online also will contribute to increased production. The recent addition of the Matterhorn Express pipeline in the Permian Basin provides more takeaway capacity for associated natural gas. Natural gas takeaway constraints can limit drilling activity, and the new capacity will allow producers to increase crude oil production in Permian Basin.