In a major shift, the United States is set to produce more oil and liquids than Russia and Saudi Arabia combined by 2025.
In Rystad Energy’s base case oil price scenario, US liquids production is forecast to surpass 24 million barrels per day over the next 6 years, thereby outpacing the combined output from Russia and Saudi Arabia.
“The United States, having regained its position as the world’s top liquids producer in 2014, is poised to accelerate into a league of its own over the next 6 years and eclipse the collective output of its two closest rivals by 2025,” says Rystad Energy partner Artem Abramov.
Historically, the US, Russia and Saudi Arabia have consistently switched places at the top of the global list of liquid producers – measuring crude oil, lease condensate and plant natural gas liquids – but lately market-driven US oil activity and production has built significant momentum. The US has not seen its liquids market share exceed 50% among the “Big Three” producing nations since 1970.
“US growth potential could be slowed if oil prices slide below our base case for extended periods but, as long as average prices stay above $50, positive US production tendencies will persist,” Abramov adds.
Rystad Energy, the independent energy research and consulting firm headquartered in Norway with offices across the globe, assumes an average WTI Cushing oil price of $58 per barrel in 2019 to 2025.
The growth in US liquids production will be driven by major shale basins such as the Permian in parts of Texas and New Mexico. Given the steep production decline rates of shale wells, consistently strong annual capital expenditure (capex) levels are needed in order to deliver on our base production forecast. This corresponds to as much as 20% growth compared to the investment level observed in the US oilpatch in 2018, while the $260 billion capex level recorded in 2014 is not expected to ever be seen again.
“Some market participants have voiced concerns about a possible depletion in resources from core parts of major liquids basins in the US. But there are no indications that such a development will occur any time soon,” Abramov notes. “While Rystad Energy generally applies a conservative approach when estimating remaining drilling inventory per acreage, even in the most mature Bakken and Eagle Ford basins, about 70% of economically recoverable resources in Rystad Energy’s base case oil price scenario have yet to be developed.”