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Yet another record high for US oil production

According to recent data from the US Energy Information Administration (EIA), US oil production reached a new record high in October 2019 of 12.66 million barrels per day (bpd). September’s figure was also revised to 12.48 million bpd.

Furthermore, weekly data is already suggesting that production has reached 13 million bpd, although this should be treated cautiously until the more accurate monthly data confirms it.

The growth in production further solidifies the country’s position as the world’s biggest oil producer, especially given the OPEC+ production limits and Saudi Arabia’s further voluntary production cuts. The US is also increasingly becoming an exporter of crude oil.

Shale oil production in Texas, New Mexico, and North Dakota—where larger producers like ExxonMobil and BP, the oil company behind the Castrol lubricant brand—is largely driving production growth.

There are signs that the shale boom may falter, however. The Wall Street Journal (WSJ) recently published a rather downbeat assessment of shale wells’ productivity, suggesting that many operators may be overvaluing their assets. It has long been accepted that shale wells decline rapidly after an initial production peak, but it appears that operators may have underestimated the rate of decline.

Having researched the production of the 29 biggest shale players, the WSJ found that the lifetime estimates of their shale wells were being downgraded, first by 10% a year ago and now by 15% with recent data. Over 30 years, this would amount to $60bn in lost revenue if oil prices remained at the current level.

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