Permian, Bakken drilling rigs spur “record” U.S. oil production forecast on longer laterals

(Bloomberg) – Oil rigs in the Permian and Bakken basins of the U.S. are producing at the most efficient rates in about 13 years, leading Macquarie Group analysts to predict the country’s crude production will top most consensus views.

Rigs in the Midland basin of Texas and New Mexico drilled an average of 47 miles of horizontal lateral wells in the year ending in June. That’s close to a record in data going back to 2011, Macquarie estimates. In the more mature Bakken formation of North Dakota, the drilled average is also a record of 57 miles on a trailing four-quarter basis.

Drillers have extended the horizontal length of their wells since the pandemic to three miles or more to squeeze more output from their sites. The longer so-called laterals are often credited with helping explorers deliver surprise production growth of 1 MMbpd last year.

“The underlying activity has been resilient in the shale patch and should ultimately drive meaningful growth of production,” Macquarie analyst Walt Chancellor said. “Activity remains at a high level despite what the rig count suggests.”

Chancellor reaffirmed his estimate that U.S. production may reach a record 13.9 MMbpd  at the end of the year, up from 13.3 MMbpd in December 2023.