America Ranks with Top Oil Producers/E&P Companies Reduce Drilling and Seek Lower Costs/ Limited Exports Allowed

The cost to produce a barrel of oil varies dramatically from one region to another and from one type of well to another. Today’s market trends have forced exploration and production companies to strive for lower costs and accelerate the adoption of efficient new techniques and technologies. Throughout the energy industry, exploration and production (E&P) firms have demanded lower prices from drilling companies and other oil field services firms. At the same time, they are demanding that their engineers and managers seek the highest possible levels of efficiency in all departments.

According to the U.S. Energy Information Administration (EIA), the U.S. led global oil production in 2022 with a 21% market share, followed by Saudi Arabia with a 13% market share. The U.S. produced 20,300 thousand barrels per day in 2022, while Saudi Arabia produced 12,440 thousand barrels per day in 2022. The Russian Federation was third with a 10% market share and produced 10,130 thousand barrels daily in 2022. (These figures represent oil production calculated in very broad terms, including natural gas liquids, or NGLs, which are a petroleum-like substance produced from natural gas, as well as biofuels.)

The EIA reported that U.S. crude production was up 9% in mid-2023 compared to the previous year. Shale oil production improvements in recent years have reduced drilling and fracking costs by 36% since 2014 according to J.P. Morgan. Producers are drilling longer horizontal wells, along with deeper wells, and reaping rewards from greater efficiencies. For example, ConocoPhillips announced plans to drill wells in 2023 that are 14% longer than those drilled in 2022. EOG Resources sank a well over five miles deep and almost three miles long in South Texas in 2023. The company has the potential to earn as much profit for oil priced at $42 per barrel in today’s market as it did for oil traded at $86 per barrel in 2014. Improvements include more powerful drilling rigs, specialized drill bits, technologies that enable improved underground steering and longer lateral well lengths. Rystad Energy reported 16% of its wells drilled in 2023 in the Permian Basin extended beyond 12,500 lateral feet, compared to 1% in 2018.

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America Ranks with Top Oil Producers/E&P Companies Reduce Drilling and Seek Lower Costs/ Limited Exports Allowed, Business and Industry Trends Analysis

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