U.S. oil production recently broke another record, jumping to 10.619 million barrels per day (mb/d) in the last week in April, and the sky seems to be the limit for U.S. shale drillers. However, the fate of U.S. oil, and ultimately a large slice of total additional output for the entire world, is all predicated on aggressive forecasts from one place: the Permian Basin.
Total global oil production is expected to rise by 6.4 mb/d by 2023, according to the International Energy Agency.
Offshore Mexico and Brazil are set to see higher levels of spending and development, and the IEA sees higher output from Iraq, the UAE and Kuwait over the next few years. Still, the U.S. accounts for 3.7 of the 6.4 mb/d of new supply through 2023.
In other words, more than half of all new production over the next five years will come from the U.S., and almost all of that will come from the Permian. The Bakken edges up a bit but declines again, as does the Eagle Ford. For all intents and purposes, U.S. shale has basically peaked outside of the Permian.
In that context, it is not an exaggeration to say the Permian is the most important place on the planet in terms of new oil supply.
Image source: artberman.com
Permian production is expected to double between 2018 and 2023, rising to 4.1 mb/d. That means that West Texas will be producing nearly as much oil as Iraq, OPEC’s second largest producer.
The oil market – and thus, the global economy – appears to be highly vulnerable with so much of the world’s supply growth dependent on one location.
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