EIA forecasts records for US production
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Crude expected to set records in both 2024 and 2025, along with natural gas production; relatively unchanged crude price expected
Kristen Nelson Petroleum News
Both U.S. crude oil and natural gas production are forecast to set records this year and next, the U.S. Energy Information Administration said Jan. 9 in its January Short-Term Energy Outlook.
The agency said that despite slower growth, U.S. crude production is expected to average 13.21 million barrels per day this year and more than 13.44 million barrels in 2025, up from 12.92 million bpd in 2023, while U.S. dry natural gas production will grow between 1% and 2% to 105 billion cubic feet per day in 2024 and 106 bcf per day in 2025, increases of 1.5 bcf per day and 1.3 bcf per day respectively. This is slower growth for natural gas than in 2023, when production increased by 4%. EIA said the slower growth "reflects a drop in natural gas production associated with oil drilling in the Permian Basin."
Liquefied natural gas exports will increase as new LNG export capacity comes online, the agency said, with LNG exports expected to grow by 2.1 bcf per day in 2025 to average 14.4 bcf per day. LNG exports averaged 11.8 bcf per day in 2023 and EIA forecasts them to average 12.4 bcf per day this year.
US crude production EIA said domestic crude production "depends on rig activity and well-level productivity to offset natural declines from existing wells." U.S. Lower 48 growth, excluding Alaska and federal offshore production, is mostly limited to the Permian in western Texas and eastern New Mexico, with producer investment being one of the main uncertainties in the forecast. "Since 2021, producers have prioritized debt reduction, dividend increases, and corporate acquisitions over capital expenditures," the agency said, although capital expenditures did increase in 2023 "and further increases would suggest more active rigs than in our forecast."
The agency does not address Alaska production but said federal offshore Gulf of Mexico production is forecast to grow slightly in 2024 and 2025 as new projects come online. EIA said GOM production is less price sensitive than Lower 48 production because of project investments made before the pandemic which will begin producing in the next two years.
Crude oil prices EIA said it expects crude oil prices to remain relatively unchanged in 2024.
Brent averaged $82 per barrel in 2023 and is forecast to remain at that level this year, dropping to $79 per barrel in 2025. EIA said it expects that in 2025 production growth will "slightly outplace demand growth, allowing inventories to build modestly and place some downward pressure on crude oil prices."
Brent averaged $78 per barrel in December, down $5 per barrel from November, with the price falling despite the Nov. 30 announcement from OPEC+ on its latest production cuts. EIA said the fall in prices was "based on ongoing concerns about global oil demand growth and on rising global oil inventories," estimated to have increased by 800,000 bpd in the fourth quarter.
The agency said global crude inventories are expected to be relatively balanced through the first quarter and then build over the final three quarters of the year on slowing demand growth, which is expected to outpace rising supply growth.
Electric generation EIA said it expects solar electric generation to account for 7% of total U.S. electric generation in 2025, up from 4% in 2023, with developers reporting almost 80 gigawatts of solar power coming online over the next two years, increasing domestic solar generation by 84% and making solar the leading source of growth through 2025.
This year, 36 gigawatts of solar power are expected to come online, followed by an additional 43 gigawatts in 2025, increasing the percent of solar power from 4% in 2023 to 6% this year and 7% in 2026.
EIA is forecasting overall U.S. electric generation to grow 3% this year and be unchanged next year.
"We are experiencing a significant shift in U.S. electric generation, as solar generation grows rapidly, taking market share from coal and tempering the growth in natural gas usage," said EIA Administrator Joe DeCarolis. "Coal and natural gas remain important to the U.S. electric grid, even as variable renewable resources such as solar and wind grow."
Natural gas, which had a 42% share of U.S. electric generation in 2023, is expected to have that same 42% share this year and drop to 41% in 2025. Coal, 17% in 2023, is expected to continue to drop, to 15% this year and 13% in 2025.
Renewables, 22% in 2023, are forecast to grow to 24% this year and to 26% in 2025, while nuclear remains stable at 19%.
EIA said growth in wind power is expected to be slower than growth in solar.
The decline in coal, 9% expected this year and 10% in 2025, is from a combination of higher costs compared to renewables and another 12 gigawatts of coal-fired generation retiring in 2024 and 2025. Electric generation from natural gas is expected to be unchanged from 2023 in both of the next two years.
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