U.S. oil production is on track to break pre-pandemic records next year, a government agency predicted, hampering the Biden administration’s ambitions to move the country away from fossil fuels.
Output is likely to rise to a fresh annual high of 12.4 million barrels per day in 2023, the Energy Information Administration said on Tuesday, obscuring the previous record volume of 12.3 mb / d set in 2019. U.S. natural gas production will also set new records over the next two years, the independent statistics agency said.
This indicates a sharp turnaround for an oil and gas industry sent into free fall by the pandemic-driven economic downturn, and resists widespread predictions that the country’s oil industry would not regain peak production levels.
The forecast comes as higher energy prices stimulate new investment in the development of oil and gas fields. The EIA expected Brent crude oil prices to average $ 75 a barrel this year and $ 68 a barrel next year – lower than spot prices, suggesting that production could rise even in a weaker commodity market.
While the Biden administration has promised a long-term move away from fossil fuels, it recently relied on the domestic oil sector to increase output to help cool a rally in motor fuel, where prices reached their highest levels since 2014 last year.
The expected supply recovery comes even as many of the largest U.S. oil and gas producers have shift their focus over the past two years away from maximizing output growth and rewarding shareholders.
Many of the country’s top producers, including ConocoPhillips, EOG Resources and Pioneer Natural Resources, are setting up new dividend schemes and using cash to buy back their own shares, rather than drill more new boreholes.
Analysts say the next wave of production growth would rather be led by smaller producers, often in family ownership or backed by private equity, which is not under the same shareholder pressure to reduce growth.
The EIA also predicts that carbon emissions from the energy sector will continue to rise through 2023 after recovering strongly from a sharp decline during 2020 in 2021.
Emissions rose by 6.2 percent in 2021 and are expected to rise another 1.8 percent and 0.5 percent in 2022 and 2023 to 4.97 million metric tons, though total emissions remain below 2019 levels.
The Biden administration is pushing hard to make America’s energy system greener, driving billions of dollars into clean energy technologies and pushing the rollout of wind and solar power. But recent government predictions suggest that it is unlikely to see significant progress in reducing emissions during President Joe Biden’s first term.
The EIA predicted that U.S. natural gas output would rise to a record 97.6 billion cubic feet per day in 2023, up from 93.5 billion last year, which would help propel the U.S. past Australia and Qatar around the world’s largest exporter of liquefied natural gas.