The U.S. is breaking oil-production records with fewer drilling rigs, per MW.
U.S. oil production has maintained record levels since October, surpassing the previous peak in 2020, despite a nearly 30% decrease in the number of active domestic oil drilling rigs over the past four years. Contributing factors to this resilience include robust oil prices, increased investment, and enhanced output efficiency. Analysts anticipate a potential slowdown in output growth, but the surge in U.S. oil production has been significant.
David Carter, a senior analyst with assurance, tax, and consulting firm RSM US, attributes the nearly tripled oil production over the last 15 years to advancements in drilling and fracking technology. Additionally, investments made in the early 2010s, driven by sustained higher oil prices and favorable government policies aimed at reducing dependence on foreign oil, have played a crucial role. Federal and state-level tax breaks, along with eased regulations for exploration and production (E&P) companies, supported the industry's expansion.
The U.S. has emerged as a major oil exporter, creating new markets for increased production despite limited growth in domestic demand. As of the week ending January 5, U.S. crude-oil production reached 13.2 million barrels per day, surpassing the previous record of 13.1 million bpd set in March 2020. Despite a 27% drop in the number of active rigs since 2010, innovations in drilling efficiency, such as horizontal drilling and fracking, have significantly increased production per rig.
In the Permian Basin, a key region for U.S. oil production, average lateral lengths and oil production per rig have experienced substantial growth. The adoption of artificial intelligence and machine learning for exploration optimization further illustrates the industry's commitment to technological advancements. Imre Kugler, director of upstream research at S&P Global Commodity Insights, notes a 10% increase in the rate of penetration over the past year and a half, indicating improved drilling efficiency.
While the number of active oil drilling rigs has decreased, the industry's focus on innovation and efficiency gains demonstrates its resilience and adaptability. Oil exploration and production companies are increasingly incorporating
