U.S. crude oil production fell by 8 percent in 2020, largest decrease on record
(The Center Square) – U.S. crude oil production fell by 8 percent in 2020, the largest annual decrease on record, the U.S. Energy Information Agency reports.
This plunge occurred one year after the U.S. reached a record annual average high of 12.2 million barrels a day in production in 2019.
In January 2020, U.S. crude oil production reached a peak of 12.8 million barrels per day. But with federal and state lockdowns halting travel over coronavirus fears, demand for oil dropped and production became too expensive to maintain.
By March 2020, the oil and gas industry experienced a “bloodbath,” and by April, the WTI was negative $40 a barrel for the first time in history. Prices at the pump also reached historic lows.
To stop the hemorrhaging, crude oil operators shut in wells and limited the number of wells brought online, laying off large numbers of workers, all of which resulted in significantly lower output. By May 2020, U.S. crude oil production reached its lowest average monthly volume for the year at 10 million barrels per day, EIA reports.
Overall, U.S. crude oil production dropped 935,000 barrels per day to an average of 11.3 million barrels per day in 2020.
The 2020 decrease in production was the largest annual decline in the EIA’s records, the agency says. It’s been tracking U.S. annual crude production since 1940.
If there was a silver lining to be found, it was in Texas and New Mexico fueled by drilling in the Permian Basin.
In Texas, more crude oil was produced than in any other state or region of the U.S. in 2020.
Texas produced 43 percent of the national total of crude oil in 2020, averaging 4.87 million barrels per day. Its production still represented a 4 percent decrease of 205,000 barrels per day from the record high of 5.07 million barrels per day set in 2019.
After the state shut down in mid-March last year, wells closed, rigs stopped operating and tens of thousands of workers were immediately laid off. Texas' oil output fell in March by an estimated 235,000 barrels per day, the largest monthly decline ever recorded, according to the Texas Alliance of Energy Producers.
The Alliance’s benchmark Texas Petro Index fell to 172 in April from 181.9 in March, the second largest monthly decline on record (the September to October 2015 11-point drop is the largest on record).
By June 2020, Texas led the nation in oil and gas bankruptcies.
New Mexico also reached a new record. In 2020, it saw the largest statewide increase in crude oil production in its history. It increased production by 15 percent, or 133,000 barrels per day, reaching a record annual average high of 1.04 million barrels per day.
New Mexico also became the second-largest oil producer in the U.S. in fiscal year 2021, behind Texas. Its oil and natural gas industry contributed $5.3 billion to state and local governments in tax revenue in FY21, the highest figure recorded in state history.
By contrast, decreases in production were seen in the Gulf of Mexico, Oklahoma, and North Dakota.
The Federal Offshore Gulf of Mexico saw the largest decrease in crude oil production in 2020, dropping 245,000 barrels per day, or 13 percent, to an annual average of 1.65 million barrels per day.
Much of this was due to weather related events such as hurricanes and tropical storms in the Gulf that forced operators to evacuate platforms and shut-in production.
Oklahoma had the largest percentage decrease of production of 19 percent, with an annual average of 469,000 barrels per day.
North Dakota saw the second-largest decrease of crude oil production of 242,000 barrels per day, or 17 percent, dropping to an annual average of 1.18 million barrels per day.