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The Future of US Oil Production


Forecasts for the coming year suggest oil production will increase in 2022 after a COVID decline and reach new records in 2023.

However, as pandemic production relied mostly on drilled but not completed wells the oil giants will have to increase their drilling in the post-COVID environment. In the long term it seems oil giants hope to bet on hydrocarbons with minor investments in greener carbon capture technology.

Based on predictions and business activity oil will remain dominant and competitive until at least 2050.


The article will be divided into roughly two sections. The first will cover the current situation of US oil and how key trends from the pandemic will influence short-term dynamics in the coming year.

These trends will include US oil projections, and the impact of strategies used by oil giants during the pandemic. The second will outline US oil in the context of climate change, analysing the key trends and plans.

It will outline how US firms are adapting to the demands of climate change, finding they are not shifting away from their hydrocarbon base.

Furthermore, whilst the climate change need for a shift away from oil is high, the environment in the US doesn’t seem conductive to such a shift.

US Oil Now

The COVID-19 pandemic certainly shook the oil industry to the point where it still hasn’t recovered. The average production of crude oil still hasn’t returned to pre-pandemic levels, and neither have US exports.

However, recent developments have introduced new optimism for the oil industry. Whilst production in 2021 was 1.1 million barrels a day (b/d) lower than in 2019 at 11.1 million, the US Energy Information Administration predicted an increase to 11.8 million b/d in 2022 and 12.4 million in 2023.

Therefore, the short-term prediction for the future of US oil seems to be one of recovery after a period of severe instability.

This isn’t very surprising, considering the stake oil has in the US economy. As Figure 1 above illustrates, crude and refined oil where the two top exporting products for the US.

Though it is interesting to look at how the sector weathered the COVID storm, and what this suggests for its near future.

Drilled but uncompleted wells (DUCs) signify a key part of the US oil covid survival strategy. DUCs represent wells which are drilled but not made fully operational, leaving the producers with “operation flexibility”.

A good example of this was the pandemic, as oil prices fell and producers felt the pressure of the pandemic they used DUCs to stabilise production. As they didn’t require drilling their costs where far lower, meaning more oil was produced for less.

However, this drove down the stock of DUCs dramatically as drilling decreased, which creates a certainty for the post-COVID US oil sector. They must increase drilling.

Productivity signifies another interesting pattern, which will certainly influence the near future of the US oil sector. Industry expert, Mark Finley, outlines how as the pandemic progressed US oil productivity rose, whilst as COVID reduced in significance and the industry resumed activity productivity declined.

How this pattern unravels will certainly interact with the need for increased drilling. As the DUCs stock dwindles, and the productivity decreases the pressure will be on to maintain, if not increase, production, putting further pressure on the industry.

Overall, the near future forecast is optimistic, especially when compared to the past two years. Production is set to increase, though the depletion of DUCs will have to be addressed. A job which might be made more difficult if the productivity rate continues dwindling.

US Oil in the Long Term

One can’t discuss the future of oil without also discussing climate change and an energy transition away from fossil fuels. Interestingly, the recent increase in oil production has fuelled a commitment towards a green energy transition.

Prominent consultancy firm, Deloitee, surveyed a variety of firms and found that US firms were following their European counterparts in net-zero pledges.

According to Deloitte’s analysing higher oil prices have allowed oil and gas companies to invest in riskier green energy solutions such as Carbon Capture, Utilisation and Storage (CCUS).

However, the general pattern indicates what will be a long and slow transition, with oil not going anywhere any time soon.

In 2018 Chevron launched its Future Energy Fund, with an initial commitment of $100 million dollars, whilst Exxon holds interests in about a third of the world’s carbon capture capacity.

In addition, Exxon and Chevron have pledged $3 billion and a $300 million venture fund, respectively, towards carbon capture and low-carbon technologies.

However, these figures continue to be very small portions of their overall oil-focused spending plans.

When looking at analysis by Deloitee , they specified “Net-Zero Pioneers” and “Green Followers”, companies who where dedicated to long term plans in renewable technologies.

However, out of their clients only 5% and 18% fit into these categories, respectively.

The rest remained committed to long term hydrocarbon reliance, with 77% of all executives indicating hydrocarbons will remain their long-term business.

Whilst these are not exclusively US firms, the sentiment is certainly reflected by the US oil giants, with a study finding overall they adopted far more anti-climate stances than their European counterparts.

A sentiment enforced by Daniel Droog, Chevron’s Vice President for Energy Transition, who said “our strategy is not to follow the Europeans”.

Whilst long term demand might dwindle, it won’t happen overnight. In 2020 gasoline accounted for 59% of total transportation energy, and 16% of total US energy.

On the other hand uptake of electric vehicles has underperformed when compared to Europe and China, with the US 2019 figure standing at 1.9%, compared to Europe’s 3%, and China’s 5.1%. As long as there is demand production will follow, and the demand for oil certainly continues to be significant.

Another factor to consider when assessing the future of oil is public attitudes towards climate change. As much as the future of oil is a business trend, and climate action is a scientific trend, both are also major political issues.

Politicians and businesses must, to some degree, respond to public pressures, and the nature of those pressures informs us on their outcomes.

In 2020 64% of Americans said climate change should be a priority for Congress and the president. Which seems like a high number, however, is quite low when compared to the EU, where 92% of respondents said it is important for their politicians to set renewable energy targets.

Furthermore, American views seem to be heavily decided by partisan loyalties, with a significant divide between Democrat and Republican voters.

A divided public certainly won’t express the same sort of pressure European voters will, further cementing the stable position of oil in the US economy for the foreseeable future.

Furthermore, EIA predictions for energy consumption indicate oil will continue to be a significant source of energy, as economic and population growth will require increased oil imports by countries who can’t produce sufficient amounts.

However, Oxford Economist, Dieter Helm, said “these projections flatly contradict the sorts of scenarios which would be required if significant climate change is to be averted” in reaction to similar predictions in the past in his book Burn Out: The Endgame for Fossil Fuels.

Overall, the long-term trend of US oil seems to be business as usual, with minor investments in carbon capture technologies.

The need for climate action and the stability of the US oil sector seem to be at odds with each other, however when looking at trends up until now it does not seem the force necessary to dethrone US oil is there.

At least not in the United States. A population divided over climate action, and a business sector which does not seem overly committed to shifting away from its current business strategy.


To conclude, the short-term prospects of US oil seem to be optimistic, whilst the long-term trends indicate stability and a slow transition towards carbon-neutral energy consumption.

After a precarious period for the industry the sector appears to have survived the pandemic and is now moving into a period of growth.

However, the dwindling of the DUCs reserves will certainly be felt as more wells will have to be drilled, a trend which might be worsened if productivity continues to fall after its rise at the start of the pandemic.

As US oil and gas firms transition out of the pandemic, they face a far bigger threat. Climate Change. However, judging from their actions it might not be as big of a priority as one would imagine.

North American firms seem to be primarily focused on their green investments centring around carbon capture, whilst their main focus continues to be on hydrocarbon extraction.

Whilst US oil firms continue with business-as-usual practices it seems the market and public are conductive to such practices.

Whilst a majority of Americans believe in climate action, the numbers are far lower than European citizens, and the partisan divides amongst US voters will probably stifle the collective pressure they could use to influence the US government and oil giants.

Similarly, oil demand seems to be significant, as transportation continues to be gasoline based with a relatively slow transition to electric vehicles.

Increased pressures will most likely mount, as the realities of climate change become clearer with time.

However, the current situation does not seem to be sufficient enough to cause an extreme change of course for US oil.

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