EIA forecasts new US crude record in 2023
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2019 current record, 12.3 million bpd; 2021 average 11.2 million bpd; 11.8 million bpd expected in 2022, 12.4 million bpd in 2023
Kristen Nelson Petroleum News
The U.S. Energy Information Administration is forecasting that U.S. crude oil production will hit a new high in 2023, averaging 12.4 million barrels per day, surpassing the previous high, set in 2019, of 12.3 million bpd. The agency said in its January Short-Term Energy Outlook, released Jan. 11, that it expects U.S. crude oil production to increase for nine consecutive quarters, beginning in the fourth quarter of 2021 and continuing through 2023.
The Organization of the Petroleum Exporting Countries is also expected to increase crude production to 28.9 million bpd in 2023, up from a 2021 average of 26.3 million bpd.
“We expect global demand for petroleum products to return to and surpass pre-pandemic levels this year, but crude oil production grows at a faster rate in our forecasts,” said EIA Acting Administrator Steve Nalley. “We expect that as crude oil production increases, inventories will begin to replenish and help push prices lower for gasoline, jet fuel, and other products in the short term.”
Brent averaged $71 EIA said Brent crude oil spot prices averaged $71 per barrel in 2021 and are expected to average $75 per barrel in 2022 and $68 in 2023.
The agency noted uncertainties in its forecast, including macroeconomic uncertainties, winter weather and consumer energy demand, resulting in a wide range of potential outcomes for energy consumption. It said supply uncertainties arise from uncertainties about OPEC+ production decision and the rate at which U.S. oil and gas producers will increase drilling.
The Henry Hub natural gas spot price averaged $3.91 per million British thermal units in 2021, with monthly average prices reaching $5.51 per million Btu in October but declining in November and December on mild weather. EIA expects Henry Hub prices to average $3.82 per million Btu in the first quarter and $3.79 per million Btu for the year, and $3.63 in 2023.
US crude At an average of 11.2 million bpd in 2021, U.S. crude oil production was down 100,000 bpd from 2020 “as a result of well freeze-offs during extreme cold in February and well shut-ins during Hurricane Ida in late August and early September,” EIA said.
While forecasting annual average U.S. crude production of 11.8 million bpd this year, rising to a new annual record of 12.4 million bpd in 2023, the agency said it doesn’t expect any month in its current forecast to surpass a monthly record 12.97 million bpd from November 2019.
“Production growth reflects oil prices that we expect will be sufficient to lead to continued increases in upstream development activity, which we forecast will proceed at a pace that will more than offset decline rates,” EIA said.
Most Lower 48 production is unconventional tight oil, the agency said, and drilling activity and decline rate dynamics are expected to drive Lower 48 production going forward. “Tight oil wells have steep declines in the early years of their production, requiring continuous drilling of new wells to maintain unchanging production rates.”
EIA said it expects Alaska production for 2022 and 2023 to stay near the 2021 level of 400,000 bpd.
Natural gas U.S. dry natural gas production is estimated to have averaged 93.5 billion cubic feet per day last year, up 2 bcf from 2020, when production fell due to low natural gas and oil prices that reduced drilling activity, the agency said.
Dry natural gas production is forecast to increase by 2.5 bcf per day in 2022, as recent price increases will contribute to an overall increase in drilling.
Natural gas exports are expected to reach record highs in 2022 and continue to grow in 2023, having averaged 10.7 bcf per day in 2021 and forecast to increase to 13.4 bcf per day in 2022 and 14.3 bcf per day in 2023, driven by a combination of rising liquefied natural gas exports and increases in pipeline exports to Mexico.
Some 11.2 bcf per day of LNG was exported from the U.S. in December, up by 0.7 bcf from a previous record in November.
“LNG export growth in 2021 was driven by rising natural gas demand and high LNG prices in Europe and Asia, reductions in global supply because of several unplanned outages at LNG export facilities worldwide, and cold weather in key LNG consumption markets, particularly in Asia,” EIA said.
Rising demand and completion of planned projects will bring new U.S. LNG export capacity online this year, supporting the forecast of increased LNG exports, projected to average 11.5 bcf per day in 2022, up from 9.8 bcf in 2021, and rising to 12.1 bcf per day in 2023.
In December 2021, U.S. LNG baseload liquefaction capacity was 10.1 bcf per day, with peak capacity of 12.2 bcf, and is expected to increase to a baseload capacity of 11.4 bcf per day by the end of 2022, with peak capacity at 13.8 bcf.
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