EIA forecasts US crude oil production rate to break record high in 2018 and again in 2019; 10.3 and 10.8 million b/d
In its latest edition of the Short-Term Energy Outlook, the US Energy Information Administration (EIA) forecasts that US crude oil production will average 10.3 million b/d in 2018—the highest annual average production in US history, surpassing the previous record of 9.6 million b/d set in 1970. EIA also forecasts that 2019 crude oil production will rise further to an average of 10.8 million b/d. US crude oil production averaged an estimated 9.3 million barrels per day (b/d) in 2017 and is estimated to have averaged 9.9 million b/d in December.
Increased production from the Permian region in Texas and New Mexico accounts for 0.8 million b/d of the forecast 1.2 million b/d of crude oil production growth from December 2017 to December 2019. EIA expects most of the remaining 0.3 million b/d of growth to come from the Federal Gulf of Mexico, as seven new projects are expected to come online by the end of 2019.
EIA expects the Permian region to produce 3.6 million b/d of crude oil by the end of 2019—roughly a 0.9 million b/d increase from estimated December 2017 levels. This would represent about 32% of total US crude oil production in 2019. Other regional forecasts are:
Production from the Eagle Ford region is expected to be between 1.2 million b/d and 1.3 million b/d in 2018 and 2019, slightly higher than the 2017 level.
The Bakken region is expected to produce an average of 1.2 million b/d in 2018 and 1.3 million b/d in 2019, up from 1.1 million b/d in 2017.
Gulf of Mexico production is forecast to average 1.7 million b/d in 2018, which would be relatively unchanged from 2017 levels, and then increase to 1.8 million b/d in 2019. The anticipated start of production in 2019 from the Appomattox project in the Rydberg field and the Mars projects in the Kaikias field, along with other projects that will begin operations in 2018 and 2019, are expected to contribute to increases in production from the Gulf of Mexico.
Crude oil production in Alaska is expected to remain flat at 0.5 million b/d in both 2018 and 2019. Ongoing exploration and developmental drilling in the North Slope and the anticipated start of production from 1H News project in November 2017 and the Greater Moose’s Tooth project in 2018 are expected to keep production in Alaska from declining as it has been in recent years.
EIA expects that the growth in crude oil production, especially in the Permian Basin, will result in increased associated natural gas production and natural gas processing.
US motor gasoline consumption remained nearly flat from 2016 to 2017 at an average of slightly more than 9.3 million b/d. EIA forecasts that US motor gasoline consumption will increase by 30,000 b/d (0.3%) in 2018. If EIA’s projected growth is realized, it would be the highest level of annual average gasoline consumption on record, slightly surpassing the previous record set in 2016. Gasoline consumption growth in 2019 is forecast to accelerate slightly, increasing by 50,000 b/d (0.6%) from 2018 levels.
Global consumption of petroleum and other liquid fuels grew by 1.4 million b/d in 2017, according to the report, reaching an average of 98.4 million b/d for the year. Although the rate of consumption growth slowed in 2017 compared with 2016, EIA expects that consumption growth will average 1.7 million b/d in 2018 and almost 1.7 million b/d 2019, driven by the countries outside of the Organization for Economic Cooperation and Development (OECD).
Non-OECD consumption growth would account for 1.2 million b/d and 1.3 million b/d of the global growth in 2018 and 2019, respectively. The non-OECD petroleum and other liquid fuels consumption growth is driven by a forecast of higher growth in non-OECD oil-weighted Gross Domestic Product (GDP). Growth in non-OECD oil-weighted GDP is expected to be 4.3% in 2018 and 4.4% in 2019, up from 3.9% in 2017.
EIA expects India and China to be the largest contributors to growth in non-OECD petroleum and other liquid fuels consumption in 2018 and 2019. China’s consumption is expected to increase by 0.4 million b/d in 2018, followed by a 0.3 million b/d increase in 2019. Consumption growth in China reflects expectations of increased use of gasoline, jet fuel, and, to a lesser extent, hydrocarbon gas liquids (HGL).
India, which saw slower-than-expected liquid fuels consumption growth of less than 0.1 million b/d in 2017, partly because of monetary and fiscal policy changes, is expected to experience stronger growth in 2018 and 2019, with consumption forecast to grow by about 0.3 million b/d in each year.