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The US oil and gas market is expected to remain strong in the forecast period from 2023 to 2028. The major drivers are growing energy demand, government support, and increased production in the Permian basin.
The US economy is expected to continue to grow in the coming years, which will lead to increased demand for energy. This demand will be met by a combination of oil and gas as well as renewable energy sources. Being a major exporter of natural gas, the country’s oil and gas industry is expected to benefit from the rising need for gas in Europe amid the Russian-Ukraine war.
The Permian Basin is one of the most prolific oil and gas producing regions in the world. Production in the basin has increased significantly in recent years and is expected to continue to grow in the coming years. These factors are expected to drive the US oil and gas market in the forecast period.
The United States government has long supported the oil and gas industry through a variety of means, including subsidies, tax breaks, and regulatory benefits. These subsidies have helped to make the industry more profitable, which has led to increased investment and production.
Subsidies have encouraged investment in new exploration and drilling activities, lowered the cost of doing business for oil and gas companies, and advanced the development of new technologies and methods for extracting oil and gas.
The rising number of oil and gas drilling permits being approved by the US federal government is also one of the major drivers for the petroleum industry in the country. Though the number of drilling permits has plunged in the past few years, the number of permits being issued is again on the rise due to tight supply conditions in the international markets.
President Biden authorized more oil and gas drilling permits in his first two years in office than former President Donald Trump, according to the US Bureau of Land Management (BLM). The BLM authorized 6,430 permits for oil or gas drilling on federal property between January 20, 2021, and January 19, 2023, as opposed to 6,172 permits during the first two years of the previous administration.
From this, it can be inferred that the US government plays a major role in driving the country’s oil and gas market.
However, increasing environmental regulations, public opposition to greenhouse gas emissions and new drilling projects, and high price volatility are acting as major restraints on market growth.
US crude oil production is expected to reach 12.7 million barrels per day (mbpd) in 2028. In 2019, the country recorded its highest ever crude oil production of 12.3 mbpd; the following years (2020 and 2021) registered a decline in production to 11.3 mbpd owing to the COVID-19 pandemic-induced decline in demand.
In 2022, the total US oil production increased to 11.9 mbpd due to increased demand (both domestic and global) and higher oil prices, which made it more profitable for oil companies to increase production. The war in Ukraine has led to an increase in crude oil demand from the United States. Russia is a major exporter of crude oil, and the war has led to a decrease in Russian energy exports. This has created an opportunity for the United States to increase its exports to the global market.
However, the production remained lower than the pre-pandemic level, as the oil companies were reluctant to increase production, fearing increased supply and the resultant price fall. The oil companies were more focused on paying higher dividends to their investors than investing in more production.
The US natural gas production increased by 5.7% from 92.87 billion cubic feet per day (bcfd) in 2019 to 98.13 bcfd in 2022. The Russia-Ukraine war is a major reason for the increase in production because the war has led to an increase in natural gas demand from the United States. Russia is a major exporter of natural gas, and the war has led to a decrease in Russian exports. This has created an opportunity for the United States to increase its exports to the global market.
In 2022, the United States became the largest exporter of natural gas. The exports were driven by strong LNG demand in Europe, high global natural gas prices, and increased U.S. liquefaction capacity. According to the Energy Information Administration (EIA), U.S. LNG exports to Europe increased by 141%, or 4.0 Bcf/d, relative to 2021 LNG exports.
The war has led to increased prices for natural gas. This has made it more profitable for producers to increase production, as they can now sell their natural gas for a higher price.
The US LNG terminals installed capacity is expected to increase from 100.8 million tonnes per annum (mtpa) in 2022 to 267.8 mtpa in 2028. These increasing US LNG export terminal capacities are indicative of the robust future growth of the US natural gas market.
The United States oil and gas upstream activities have seen growth post-pandemic, but at a much slower rate than in the pre-pandemic period. US oil production has been increasing at an annual rate of 0.6–0.7 million bpd, or roughly 5-6% in 2022, which is less than half the pace in 2014 and 2018, the peak years of the first and second shale booms.
Since its post-pandemic low in August 2020, the number of oil drilling rigs has increased. Though the rig count has increased (at a slower pace), the number of new oil and gas wells completed has remained largely stable.
The rising EPCI costs, among others, are a major challenge facing the upstream segment.
The midstream sector is critical to the oil and gas industry in the United States, acting as a vital link between the upstream and downstream sectors and facilitating the transportation, storage, and processing of crude oil, natural gas, and related products.
The United States holds the largest share of the world's transmission pipeline network for oil and gas. The country’s vast network of pipelines transports crude oil and natural gas from production areas to refineries and processing plants.
The capacity of interstate natural gas pipelines registered the smallest increase in 2022; the major reason for this was low capital expenditure by the oil and gas companies.
The downstream oil and gas sector in the United States is responsible for the processing, refining, and distribution of petroleum products to end-users such as consumers, businesses, and industries.
Most of the refineries in the United States operated at high capacities in 2022 due to the continued recovery in product demand post-pandemic and the decline in US refinery capacity.
Though the demand for petroleum products has recovered following the significant impact of lockdowns and travel restrictions on oil consumption, the downstream segment is facing increasing pressure from the energy transition towards more sustainable, and clean energy sources, in response to concerns over climate change and environmental impacts. This includes a push towards electrification of transportation, which could potentially reduce demand for petroleum-based fuels in the future.
The IRA has a provision that ties renewable energy development intrinsically to fossil fuel interests. For example, the law requires the government to provide at least two million acres of federal property for onshore oil and gas leasing before issuing any proposed wind or solar lease.
In addition, for solar and wind projects to move forward, the government must arrange a quarterly lease sale that results in an oil and gas lease. This means that over the course of a decade, the IRA might give up about 20 million acres of public property for oil and gas leasing.
However, the IRA raises the onshore royalty rate to 16.67% from 12.5% and the offshore royalty rate to 18.75% from 12.5%. This increase in onshore and offshore oil and gas royalties is likely to have a significant impact on US oil and gas companies. The rise in royalties might diminish oil and gas company revenues and may cause some businesses to reduce production.
Blackridge Research's United States (US) Oil and Gas Market report contains the oil and gas production analysis, revenues from oil and gas operations of key players in the United States (US), exports and imports from and to the United States (US), oil and gas supply-demand dynamics, and the competitive landscape.
Also, the list of ongoing and upcoming oil and gas production wells, the government regulations and award of contracts, the list of upcoming gas and oil pipeline projects and the ones in use, and the list of refineries, LNG terminals, and gas processing plants (if any) along with their individual capacities from our extensive database of global project tender tracker.
Furthermore, the report will contain the drivers and restraints within the United States Oil and Gas Market along with a meticulous evaluation of their impact in the near-, medium-, or longer-term using Harvey balls and a presentation to enable identification of market opportunities and planning for long-term growth.
The impact of the COVID-19 pandemic is an integral part of the report.
Get a free sample copy of the United States (US) Oil and Gas Market Report by clicking the "Download a Free Sample Now!" button at the top of the page.
1. Executive Summary
2. Research Scope and Methodology
3. Market Analysis
4. PESTLE Analysis
5. Market Segmentation & Analysis
6. Key Company Profiles
7. Competitive Landscape
8. Conclusions and Recommendations
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