American oil reaches 'record-high- production, driven by Permian Basin
Adrian Hedden
U.S. oil production grew to a record-high this year, driven largely by the Permian Basin in southeast New Mexico and West Texas.
April brought an average production of 12.2 million barrels per day (b/d), per a Monday report from the U.S. Energy Information Administration (EIA).
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That was the first time U.S. production surpassed 12 million b/d, per the report, less than a year after domestic crude oil passed 11 million b/d in August 2018.
That last time monthly production reached 10 million or more b/d was in 1970, the report read, and dipped to about 4 million in 2010.
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Texas and the Federal Offshore Gulf of Mexico (GOM), were the two largest-producing areas in the U.S., read the report, and also reached their own production records in April at 4.9 million b/d and 1.9 b/d, respectively.
Oklahoma also reached a record 617,000 b/d, the report read.
The development of low permeability or “tight formations” accessed via hydraulic fracturing was credited with leading the spike in production, accounting for about 7.4 million b/d or 61 percent of total oil production in the U.S.
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The Permian Basin in West Texas and southeast New Mexico was credited with leading the growth in nationwide oil production due to its “prolific” tight oil plays with multiple layers, the report read.
The Permian accounted for about 63 percent of Texas’ production and 96 percent of production in New Mexico.
From January 2018 to April, Texas crude oil production grew by about 28 percent, or 1.1 million b/d, while New Mexico’s grew by 64 percent or 345,000 b/d.
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The growth was caused by increasing pipeline development and other transportation methods in the Permian Basin region, read the report.
The EIA predicted Permian production will average about 4.4 million b/d in 2019, growing by 920,000 b/d in 2018.
“Despite pipeline capacity constraints, the Permian region’s month-over-month growth averaged nearly 100,000 b/d for almost all of 2018,” read the report. “Industry efficiencies in pipeline utilization and increased trucking and rail transport in the region have allowed crude oil production to continue to grow.”
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GOM production was expected to average about 1.9 million b/d in 2019, making it the second-largest contributor to domestic crude oil production.
The forecast was driven by 14 new fields brought online in 2018, and another nine expected this year, contributing more than 200,000 b/d, the report read.
New Mexico a national leader
New Mexico reached its all-time-high for production at 250 million barrels of oil in 2018, climbing 46 percent or 78 million barrels past the record of 171 million barrels in 2017.
Ryan Flynn, executive director of the New Mexico Oil and Gas Association said the growth in energy production will benefit all New Mexicans by driving up revenue to the State.
The oil and gas industry was credited with driving a recent $1 billion budget surplus in New Mexico’s General Fund.
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“New Mexico’s oil and natural gas industry continues to be the economic backbone of our state. Record energy production is not only good for jobs and the communities where we produce oil and natural gas, it means important funding for our public schools and the entire state budget while protecting our environment and natural resources,” Flynn said in a statement.
He called on lawmakers and state regulators to enact legislation that would encourage more investment and avoid regulations that could be stymie the growth.
“The only impediments to more growth for our economy and oil and natural gas production are regulatory uncertainty and detrimental policies crafted in Santa Fe,” Flynn said.
“Together, our focus should be on finding ways to safely continue the growth that is helping turn New Mexico around, not hinder it.”
Meanwhile, the Permian Basin also saw four rigs added in the last week from 412 on July 3 to 416 on July 4, per data from Drillinginfo.
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The Basin lost a rig as of July 7, but remained the highest rig county in the country, records show, despite dropping by a total of 43 rigs in the last year.
In total, the U.S. added seven rigs over the Fourth of July weekend, records show.
“Just because it’s America’s Birthday week, doesn’t mean the drilling activity is going to slow down,” said Drew Nixon, product manager at Drillinginfo.
“Despite the holiday, the active rig count increased over the last week by seven rigs, which is a good thing as we start the second half of the year.”
More oil and gas news:
- Oil and gas pipelines in NM, Texas to solve Permian 'bottlenecks'
- More oil and gas disposal wells to address growing waste from Permian Basin boom
- How much does oil and gas give to your schools? Data shows boom towns get less than metros
- Study: New Mexico loses on federal oil and gas leases, industry calls for quicker approvals
- Companies partner to bring remote healthcare to oil and gas workers
Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.