activity increased 51.3% on an average yearly basis, driving U.S. crude production
up to 11.9 MMbopd in 2022, a 6.4% increase compared to the 11.2 MMbopd averaged
during 2021. The increased output was augmented by U.S. companies completing a
large backlog of DUCs in two major oil shale basins. WTI started 2022 at $83.22/bbl,
then climbed steadily throughout the year, despite rising interest rates, fear of
economic recession and restricted Russian supply, caused by its war in Ukraine.
Crude prices hit a 15-year high in June 2022 at $114.84/bbl before falling back
down and ending the year at $76.44/bbl. The surge in commodity prices caused
U.S. operators to cautiously increase drilling activity, but high debt and a
lack of bank financing slowed a more vigorous upturn.
As noted, U.S.
oil production increased during 2022, with noticeable gains in New Mexico, up 24%
to average 1.57 MMbopd (+304,400 bopd) and Texas, which jumped 5.1% to 5.36
MMbopd (+260,000 bopd). In addition to improved drilling activity, the increase
in Texas and New Mexico was due partially to large reductions in DUCs in the
Permian region, with 377 mothballed wells completed (-26%), while the Eagle
Ford shale saw a reduction of 216 archived wellbores (-30%) on a y-o-y basis. Louisiana
and the federal offshore averaged 1.526 MMbopd (+70,800 bopd), an increase of 4.9%,
as renewed activity focus in the GOM started to come on-line.
production in North Dakota registered a slight 1.2% decrease, down to 1.068
MMbopd, with a three-well increase in the region’s DUC count (531) despite
sustained high oil prices. According to the EIA, mature wells that are
producing more gas than expected are hampering crude output in the Bakken. The deteriorating
performance was the main reason the agency cut its estimate for 2024 U.S. oil
output to 12.65 MMbpd from an earlier projection of 12.8 MMbpd.
states. Despite Colorado’s multiple green initiatives, crude output jumped
10.4% in 2022, increasing to 434,300 bopd, while Wyoming posted an 8.3% gain,
up to 251,600 bopd, 19,300 bopd more than reported in 2021. In California,
waning drilling activity, which first started in 2015, continues to negatively
impact the state’s production, which dropped to 342,800 bopd in 2022, a decline
of 7.3% after a 9.1% drop in 2021. A 28.2% increase in Utah pushed that state
up to 127,300 bopd from 99,300 bopd in 2021. Production in Alaska was
essentially unchanged, averaging 437,300 bopd.
Mid-continent, production in Oklahoma was up a noticeable 6.8%, with several
operators completing high-flow oil wells in the state’s SCOOP and STACK plays.
These highly commercial producers pushed the state’s output to 417,400 bopd, up
from 390,700 bopd in 2021. Despite virtually no shale activity, operators
working Kansas managed to increase crude output 3%, to average 78,000 bopd in
2022. Drilling in Kansas should be up 12%, with 90% of the new wells targeting
oil. In Ohio, which produces more liquids than its neighbors,
the number of new drilling permits issued to companies exploring the Utica
shale increased substantially in 2022, compared with the previous two years.
The increased activity drove production in the state up 22% to 60,500 bopd,
making it the largest oil producer in the Niobrara region.
spot prices averaged $6.45/MMBtu in 2022, due to increased demand for U.S.
LNG in Europe. But after reaching a peak of $8.81 MMBtu in August, prices plummeted
$5.54/MMBtu to average just $3.27/MMBtu in January, a 63% decline. The dramatic
price drop forced the EIA to revise its 2023 HH natural gas spot price to $3.40/MMBtu,
down 50% from last year and 30% less than their January STEO prediction. The
revision was the result of significantly warmer-than-normal weather in January
that led to less-than-normal consumption for space heating and pushed
inventories above the five-year average. In any case, natural gas prices will be supported by the Russia-Ukraine
production. The EIA reported U.S. dry natural gas averaged 100.2 Bcfd
in January and predicts similar production to continue in the first quarter of
The EIA expects output to hover at approximately 100 Bcfd for the remainder
of the year; overall, we expect dry natural gas production to average between
100 Bcfd and 101 Bcfd in 2023. EIA expects less demand for natural gas than
last year for most of 2023, due to decreased demand from the electric power
sector. This will take place, as more renewable electric generation sources
come online, combined with decreased demand in the industrial sector ,as a
result of an expected drop in manufacturing activity.
production. Monthly average marketed gas production steadily increased
throughout 2022, starting the year at 102.71 Bcfd, before climbing back up to
the yearly high of 109.72 Bcfd in December. The increased consumption was
driven by escalating demand, especially for U.S. LNG cargos in Europe. However,
reduced demand in the U.S. caused HH spot prices to tumble.
forecast. EIA expects utilization at U.S. LNG export facilities to be
slightly lower in the next several months because of high natural gas stock levels
in Europe. But U.S. LNG exports are forecast to rise, once the Freeport
facility is back online, with LNG exports up 11% (1.2 Bcfd) on an annual basis
in 2023, compared with 2022. WO