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US oil production hits new weekly record

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The US Department of Energy has announced that the weekly production of crude oil in the US hit a new record of 13.2 million barrels per day (bpd) in the first week of October.

The previous record of 13.1 million bpd had been set in March 2020, as the demand for oil plummeted when the world grappled with the challenges of dealing with the COVID-19 pandemic.

With the price of WTI crude dropping below $15 per barrel, many operators slashed their production. Those losses have now been completely wiped out, and some believe production may rise by a further million bpd by 2025.

Nevertheless, the increase in US production is not geographically uniform. Production in Alaska remains on a long-term decline, while in the Gulf of Mexico, it has simply recovered to previous levels. Even the shale plays in North Dakota and Oklahoma remain sharply down.

The real success story is the Permian Basin of Texas and New Mexico, where average production costs are just $42 per barrel, and operators can use pipelines fully within Texas, thus avoiding federal regulation.

This helps explain the decision of ExxonMobil, the maker of the Mobil lubricant and grease range, to buy rival operator Pioneer. CEO Darren Woods said about this recently on CNBC:

“Their capabilities, bringing in their Tier 1 acreage, our technology, our development approach, frankly, brings higher recovery at lower cost.”

Rival Chevron has also made a number of shale acquisitions as it seeks to bolster its presence within the Permian Basin.

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