In September, the United States witnessed a remarkable surge in its oil production, setting a new all-time high. This increase, predominantly driven by the resurgence in Texas and consistent drilling activities within the Permian Basin, highlights a dynamic period for the nation's energy sector. However, amidst this growth, there are indications that some key producing areas might be approaching their maximum output capacities, suggesting a potential recalibration of future production trajectories.
The latest figures from the U.S. Energy Information Administration's Petroleum Supply Monthly (PSM) reveal that crude oil and condensate production in September climbed by 44,000 barrels per day (kb/d), reaching an impressive total of 13,844 kb/d. This milestone underscores the robust recovery and expansion within the domestic oil industry, particularly following earlier disruptions.
Texas has been a pivotal player in this resurgence, demonstrating a strong rebound in production since experiencing a weather-related downturn in January 2025. This recovery illustrates the resilience and operational efficiency of the state's oil and gas infrastructure, quickly overcoming challenges to contribute significantly to the national output.
Colorado also played a role in the expanding production landscape, with its drilling activities showing a steady upward trend. Starting with 6 rigs in January and February 2025, the state's rig count peaked at 11 by October, indicating increased investment and operational focus in the region. This steady rise in drilling suggests a concerted effort to explore and extract more resources.
Within the Permian Basin, a critical hub for U.S. oil production, monthly drilling rates have maintained stability, holding at 445 for the past three months. This consistent level of activity in the Permian is crucial, as it is a major contributor to the overall national production figures and often sets the pace for the industry.
While the current production levels are at a record high, analyses of gas-oil ratios (GORs) in key Permian counties such as Lea, Midland, and Martin suggest a nuanced future. Increasing GORs often indicate that oil fields are nearing their bubble point phase, which can precede a decline in oil production, despite ongoing efforts to sustain or increase output. This trend points to the possibility of a plateau or eventual decrease in production from these mature fields.
The impact of legislative frameworks, such as the OBBBA legislation, on U.S. oil drilling economics is also significant. By reintroducing 100% bonus depreciation, easing restrictions on intangible drilling cost deductions, and reducing royalty rates, this legislation aims to lower breakeven costs and incentivize drilling operations. Such policy support is designed to encourage continued investment in the sector, potentially mitigating some of the natural declines from aging fields.
Looking ahead, projections indicate that U.S. oil production might experience a decline of 239 kb/d between September 2025 and December 2026. This forecasted reduction, primarily influenced by an anticipated plateau in production from major contributors like Texas and New Mexico, suggests that the current record-breaking growth may not be indefinitely sustainable, emphasizing the cyclical nature of oil extraction and the continuous search for new reserves and enhanced recovery techniques.
