EIA’s Annual Energy Outlook 2019 (AEO2019) Reference case projects that U.S. tight oil production, which became the more common form of oil production in 2015, will continue to increase through 2030, ultimately reaching more than 10 million barrels per day (b/d) in the early 2030s. Tight oil production reached 6.5 million b/d in the United States in 2018, accounting for 61% of total U.S. production. EIA projects further U.S. tight oil production growth as the industry continues to improve drilling efficiencies and reduce costs, which makes developing tight oil resources less sensitive to oil prices than in the past.
Recent growth in U.S. crude oil production has been driven by the development of tight oil resources, primarily in the Permian Basin in western Texas and eastern New Mexico. Three major tight oil plays in the Permian Basin—the Spraberry, Bone Spring, and Wolfcamp—accounted for 41% of U.S. tight oil production in 2018. In the AEO2019 Reference case, approximately half of cumulative tight oil production through 2050 is expected to come from these three plays. The Bakken and Eagle Ford plays also remain major contributors to U.S. tight oil supply through 2050, accounting for 19% and 17% of cumulative tight oil production, respectively.
However, future growth of domestic tight oil production depends on a variety of factors, including the quality of resources, technology and operational improvements that increase productivity and reduce costs, and market prices. AEO2019 includes several sensitivity cases that incorporate different assumptions regarding oil prices, technological improvement, and resource recoverability.
The High Oil and Gas Resource and Technology case uses more optimistic technology and resource assumptions than in the Reference case. In this case, U.S. tight oil production increases through the mid-2040s, as higher productivity reduces development and production costs, spurring additional resource development. Tight oil production slowly decreases toward the end of the projection period as drilling moves to less productive areas. Total U.S. oil production in 2050 in this case is nearly 19 million b/d, much higher than the Reference case level of about 12 million b/d.
In the Low Oil and Gas Resource and Technology case, which uses more pessimistic technology and resource assumptions than the Reference case, tight oil production still increases from its current level through the early 2020s before gradually declining through 2050. Total U.S. oil production in 2050 in this case falls to about 8 million b/d.
In these two sensitivity cases, technology and resource assumptions are modified, but the world oil prices are assumed to be the same as in the Reference case. The AEO2019 also contains two cases that assume higher and lower world oil prices under the same resource and technology assumptions as in the Reference case.
In the High Oil Price case, West Texas Intermediate spot prices rise rapidly from $68 per barrel in 2018 to more than $100 per barrel in 2019 and then gradually increase to $208 per barrel by 2050 (in 2018 dollars). As a result, total domestic crude oil production increases to almost 18 million b/d by 2024 before declining to 13 million b/d in 2050. This high oil price assumption results in the fastest near-term increase in tight oil production as higher prices speed up the pace of drilling. After the mid-2020s, tight oil production declines through 2050 as drilling moves to less productive areas.
In the Low Oil Price case, sustained low oil prices, averaging less than $50 per barrel through 2050, cause total domestic production to increase more slowly, from 10.9 million b/d in 2018 to nearly 13 million b/d in 2022, before gradually declining through the rest of the projection period. Tight oil production averages close to 6 million b/d in 2050, accounting for 69% of total domestic oil production.
Principal contributors: Dana Van Wagener, Faouzi Aloulou
