Permian oil production to hit fresh record in 2024, Plains All American Pipeline reports

(Bloomberg) – Oil production from the prolific Permian basin of West Texas and New Mexico is poised to rise to fresh record this year as drilling gets more efficient, according to a major U.S. pipeline operator.

Production from the basin is set to reach 6.4 MMbpd at the end of this year, up from 6.1 MMbpd at the end of 2023, Plains All American Pipeline LP said in its fourth-quarter earnings presentation. The growth will happen due to drilling efficiencies even as the number of rigs remains stable, Chief Financial Officer Al Swanson said.

Three hundred rigs are “probably doing the work of close to 330 rigs 12 months ago,” he said. In the long term, Swanson also sees the industry increasing the amount of oil pumped from each well compared with the total volume available in the field. The Permian’s Delaware basin will lead the increase, while production in the Midland section will remain stable, Swanson said.

Last year, total U.S. oil production soared by 1 MMbpd as operators drilled deeper and longer wells — some stretching for miles — to extract more crude. The surge helped American crude exports rise to a record, putting pressure on OPEC to restrain production and supplying European buyers who’ve turned away from Russian crude because of the war in Ukraine.