Increased Well Productivity Contributes to Permian Production Growth: EIA

U.S. crude oil production and marketed natural gas production is projected to increase by an average of 13.7 million barrels per day (b/d) and an average of 114.3 billion cubic feet per day (bcf/d) during 2025, according to an Aug. 22 report published by the U.S. Energy Information Administration. The projected growth in natural gas production and oil comes from eastern Mexico and the Permian region of western Texas. The increase in production can be attributed to higher productivity, new and expanded infrastructure and higher financial incentives to produce due to relatively high crude oil prices.

U.S. natural gas production and crude oil has been rising, despite a decrease in the quantity of active rigs since late 2022. In the Permian region, increased rates of production from new completions are leading to higher natural gas and crude oil output and compensating for the decline in existing wells production. The increase in productivity indicates significant efficiency gains and technological advancements in the drilling and completion process.

Newly completed wells in the Permian region produced on average 433,000 b/d in their first complete month, as of July 2024. Natural gas production from new Permian wells in July 2024 averaged 780 million cubic feet per day. Increasing well productivity highlights the fact that producers in the Permian region are effectively employing more innovative drilling and completion procedures, including optimized well spacing, longer lateral lengths and improved fracturing designs.

The agency projects crude oil production in the Permian region to rise by 430,000 b/d from 2023 to 6.3 million b/d during 2024 and further rise to 6.6 million b/d in 2025, in line with drilling productivity enhancements. Moreover, the agency forecasts marketed natural gas production in the region to rise by 1.9 Bcf/d during 2024and 1.0 Bcf/d in 2025 to average 25.8 Bcf/d during 2025.

A number of projects are currently under development in the Permian region and the agency projects that new pipeline capacity will transport natural gas and crude oil from the Permian region to demand centers, and as a result reduce transportation limitations.