Based on the historical record, after prices peak it takes on average 5 months for drilling to turn down and 12 months for production to decline.
Following the drilling peak, Lower 48 output is likely to peak in the third quarter of 2023, as exploration and production firms work their way through the inventory of drilled but uncompleted oil wells.
Chartbook: U.S. oil and gas productionOn the gas side, dry production amounted to 3,082 billion cubic feet in June, an increase of 4% compared with the same month a year earlier (“Natural gas monthly”, EIA, Aug. 31).
Like oil, though perhaps a few months later, gas production is likely to peak and turn lower before the end of 2023 as low prices and the slowdown in drilling filter through.
Related columns:- Oil market to tighten modestly in late 2023 (August 17, 2023)- U.S. oil and gas production begins to flatten (August 4, 2023)- U.S. oil and gas production set to turn down later in 2023 (July 5, 2023)- U.S. oil and gas output still rising in response to high prices last year (June 1, 2023)John Kemp is a Reuters market analyst.
Persons:
Baker Hughes, John Kemp, Kirsten Donovan
Organizations:
U.S . Energy Information Administration, “ Petroleum, Saudi, Thomson, Reuters
Locations:
Gulf, Mexico, Ukraine, U.S, Saudi Arabia, Russia