A lot more U.S. crude may be coming — eventually
Growth in drilling permits for new wells in the most prolific U.S. oilfield could signal a coming production surge, the consultancy Rystad Energy said.
Why it matters: Producers face calls to accelerate growth as some buyers shun Russian crude and U.S. gas prices average over $4-per-gallon.
Driving the news: Permit approvals in the Permian Basin for horizontal drilling — which is key to unlocking shale oil — grew to 904 in March.
- It's a record high for the region in West Texas and New Mexico, "driven by elevated oil prices and production demand," Rystad said.
Yes, but: Don't expect an immediate production jump.
- Artem Abramov, Rystad Energy's head of shale research, said the permits herald faster output expansion "over the next few months once supply chain bottlenecks ease."
- It "foreshadows a significant increase in supply capacity from early 2023," he said in a research note. But Rystad cautioned that permits don't guarantee drilling or production from specific wells.
What we're watching: The growth trajectory as production returns from 2020's COVID-fueled collapse.
- The U.S. Energy Information Administration currently sees production averaging 11.90 million barrels per day (mbd) this quarter.
- EIA forecasts a rise to 12.46 mbd in Q4, before climbing to exceed 13 mbd in the latter half of 2023. On an annual basis, the agency sees a record average of roughly 13 mbd next year.