Short Term Energy Outlook, March 2025

The EIA Short Term Energy Outlook (STEO) was published recently. An estimate for World C+C output from 2015 to 2026, with forecast values for 2024 to 2026 based on the recent STEO n chart below. A slightly different methodology was used this month by looking at World C+C minus US C+C from the EIA’s International Energy Statistics and World crude minus US Crude as reported in the STEO to find World minus US condensate output. The trend for the condensate data from 2018 to 2023 was used to project condensate from 2024 to 2026 for World minus US and then the forecast for US C+C was added to the World minus US crude forecast along with the condensate forecast to arrive at World C+C.

World C+C increases by 2142 kb/d from 2024 to 2026 an annual increase of 1071 kb/d. The growth rate looks optimistic especially when the low prices of the STEO forecast are considered. Last month’s estimates were 81861, 83229, and 84460 for 2024, 2025 and 2026 respectively, so the estimates are all lower this month compared to last month.

The demand estimate above is the EIA and Energy Institute estimate from my previous post, the supply curve is adjusted 770 kb/d higher to coincide with the Energy Institute C+C estimate from 2015 to 2023, the 770 kb/d is also added to my 2024 to 2026 forecast in the previous chart. I expect the 2026 forecast (84613 kb/d in the chart above) is at least 1000 kb/d too high.

Brent oil prices are expected to fall due to oversupply in late 2025 and 2026.

I believe looking at C+C supply and demand is more useful that total liquids, particularly when considering the price of crude oil. The demand estimate by the EIA looks more reasonable in my view than the supply estimate. At a Brent price of $68/b in 2026, I would not expect a surge in C+C output.

The Trump administration is trying to reduce oil exports from Iran and Venezuela which will tend to reduce OPEC+ crude output, low oil prices may also reduce the growth in OPEC+ output so more than 36 Mb/d seems unlikely if the oil price forecast proves correct.

The forecast for WTI in 2026 is $3/b higher than last month’s report and output in 2026 is also higher by 100 kb/d compared to last month as a result. The other figures in this table are unchanged from last month’s report.

Distillate stocks are expected to fall to below the 2019-2023 range in 2026 due to refinery closures and higher demand.

The lower stock levels of distillate fuel will lead to lower net exports in 2025 and 2026 compared to 2024.

Net exports of HGL increase by 10% in 2025 and by 7% in 2026 as there is high demand for these products in the petrochemical industry. Domestic consumption is expected to be flat for these products while higher natural gas output leads to higher NGL output most of which will be exported.

Last month the forecast for Natural gas price was $3.80 and $4.20 per MMBtu in 2025 and 2026, so a significant increase this month with 2025 at $4.20/MMBtu and 2026 at $4.50/MMBtu. Also the consumption of natural gas has been revised higher in 2025 and 2026 relative to last month’s forecast (91 and 90 BCF/d.)

The chart above shows the significant change in the natural gas price forecast since last October. For the first two months of 2025 natural gas prices were $0.80/MMBtu higher than the October 2024 forecast.

Natural gas output was 103 BCF/d in 2024 and rises by 2% in both 2025 and 2026.

The right hand side of the chart above is more useful as comparisons of capacity are not straightforward between wind, solar and fossil fuel sources. Output from natural gas power plants falls in 2025 due to higher natural gas prices and coal output is expected to fall in 2026 due to a smaller increase in demand and expanding output from wind and solar.

Again I focus on the right side of the chart above (generation of electric power) with wind and solar output expanding to 19% of total power output by 2026 and all non-fossil fuel power output (solar, wind, hydro, and nuclear) at 44% of total electric power output (up from 41% in 2024.)

Permian region C+C output increases to 6.85 Mb/d in 2026 from 6.3 Mb/d in 2024 in the March 2025 STEO.

US L48 excluding GOM C+C output increases from 11.03 Mb/d in 2024 to 11.52 Mb/d in 2026. All of this increase comes from the Permian Basin.

Estimate of Permian region output using latest TX RRC and NM OCD and EIA data. Output has been pretty flat from August 2024 to December 2024.

25 thoughts to “Short Term Energy Outlook, March 2025”

  1. STEO projection for Permian Basin Region C plus C through Dec 2026, chart starts at December 2022 and reflects monthly data estimates and forecast. The OLS trend for Jan 2023 to Dec 2025 has the annual rate of increase at 382 kb/d, and for Jan 2026 to Dec 2026 the OLS trend has an annual rate of increase of about 58 kb/d, more than 6 times lower than the earlier 2023-2025 period.

  2. https://www.business-standard.com/world-news/venezuela-increases-oil-exports-to-china-as-us-secondary-tariff-tightens-125032701435_1.html

    Seriously, who could not have predicted that Trump cutting off Chevron in Venezuela and Tariffing anyone that imports Venezulan oil.

    Would simply shift that oil to China!!!!

    As far as Peak Oil is concerned, America being right next to Canada and Venezuela is extremely fortunate…

    And Trump is trying to RUIN IT.

    1. Andre the Giant,

      Trump is not the sharpest tool in the shed, he probably is not aware how much oil we import from Canada and likely is not aware that much of the tight oil produced in the US is not well suited to the refinery capacity that exists in the US. Drill baby drill doesn’t help much if we cannot refine the oil that oil produced.

      Trump is unlikely to know any of this.

  3. I read another article with more detail regarding the Dallas Fed survey comments. Major frustrations with President Trump.

    Glad I’m not as out of step with other oil producers as I had thought I was.

    Maybe he needs to send oil producers checks like he does the farmers to keep them in line.

    Next week US farmers will be be getting a big payday, between $29-42 per acre for 2024 corn, wheat and soybean acres, maximum of $125k, $250k if 75% or more of income is agriculture related.

    There will be a lot of farmers who max out on this, as farms have gotten much bigger and much fewer in number.

    And they complain about food stamps.

  4. Great stuff from Mr.Shellman, especially see the comments

    https://www.oilystuff.com/forumstuff/forum-stuff/green-chickens-on-u-s-natgas-abundance-lng-exports

    Also this chart for appalachian has normalized well profiles, it would be interesting if there was a cumulative well profile, but it looks like the well profile may have peaked around 2020 when normalized for lateral length.

    https://static.wixstatic.com/media/8cc98c_d447efcd77a148ffafe621d065709426~mv2.png/v1/fill/w_984,h_522,al_c,q_90,usm_0.66_1.00_0.01,enc_auto/8cc98c_d447efcd77a148ffafe621d065709426~mv2.png

    The last Novilabs post that we can get data for all of the Appalachian is at link below

    https://novilabs.com/blog/us-update-through-december-2021/

    From this US post you can chose gas and select any of the basins covered, link below has appalachian gas wells

    https://public.tableau.com/shared/N6NNCZ9P5?:toolbar=n&:display_count=n&:origin=viz_share_link&:embed=y

    1. Always read the comments section as well with Mr. Shellman’s valuable posts. Great Info in both places..

      I consider Mike, whether you agree with him politically or not, an American HERO.

      Cause he is being honest and is obviously qualified,

      and most others are bullshit to line their own pockets!

      PS: My one disagreement with Mr. Shellman is his feelings toward Dennis.

      Dennis is doing great work and being honest, he just disagrees with your view.

      He aint trying to sell you a life insurance policy, just doing his analysis.

      Not everyone can have their hand in the dirt!!

      1. “BOE Report is Canada’s source for oil and gas news, activity and information. The publication launched in January 2013 and is the most read daily oil and gas news website in Canada, reaching over 100,000 energy professionals each month.”

        https://boereport.com/2025/03/27/us-oil-producers-face-new-challenges-as-top-oilfield-flags/

        “U.S. oil producers are grappling with geological limits to production growth as the country’s top oilfield ages and produces more water and gas and less oil – and may be nearing peak output.
        The Permian basin was the centerpiece of the shale revolution that began nearly two decades ago and spurred the U.S. to become the world’s top oil producer, stealing market share from the Organization of the Petroleum Exporting Countries (OPEC) and other top producers.”

      2. Shellman’s angry illogical outburst just before the election about how he was going to vote for Trump because he (Shellman not Trump) had worked hard as a young man was a great illustration of the danger of social media.

        You can’t make good decisions if you judgement is clouded by emotions. Social media is designed to keep users engaged by triggering their emotions. Anger is one of the easiest emotions to stir up.

        The tech bros discovered this as a get rich quick scheme, but since then darker powers have recognized its usefulness. If you get triggered by something you read online or see on the TV, step back and take a deep breath. Chances are you are being manipulated.

      3. Andre,

        I agree the Mike Shellman does great stuff, I also agree with him that exporting US oil and natural gas is not a smart policy.

        1. When the oil runs out the US will have had a large net oil debt with the rest of the world. A lot of that was pure waste thanks to incompetent transportation policy. The question is how the country will pay for it.

          If the US can sell oil and gas overseas, it has a competitive advantage in this sector. It should use that to pay back some of its vast foreign debt, much of which was incurred by imprudent consumption of foreign oil. It really does not make sense for a country not to make use of its competitive advantages.

    2. D C,
      That normalized productivity stagnant in AB by Mike is not a simple normalized to lateral length, it also normalized to proppant loading.
      The prop loading is nearly irrelevant to the gas in place or tier 123s in Marcellus AB, its cost could zero if following current trend of prop loading. i.e. from “ceramic gel” to “white sand slick water” to “local sand slick water” to “wet sand slick water”
      The prop loading is the biggest myth/sham in shale revolution or fracking.
      Initially, 50 years ago all textbook in petroleum engineering will tell you prop is the central pillar of fracking. Fluid is the collateral damage to the well when you have to use fluid to carry prop to the fractures. But, from day one of shale revolution, the fracking pioneers like Mayohofer had been preaching SRV, or volumetric stimulation where prop loading is no longer the central pillar. This is also what Mayohofer has been preaching in Wright’s Pinnacle. But the fracking neocons or deep state has been so strong that still the majority does not bite SRV. The AI studies like NOVI and others keep on pressing prop loading and confuse it with fluid, which are de facto brothers.
      see my unconventional story here,
      https://www.linkedin.com/pulse/shale-revolution-arent-when-you-judge-conventional-wisdom-sheng-wu
      The mainstream like Ted now in SAU and Art believe gas and oil are the same, but they are not. The gas almost don’t have the PVT bubble point death problem, lifting cost usually much lower, and recovery usually 2X or higher than oil. In AB, Marcellus recovery easily top 50% even with 600ft spacing. In WV, and SWPA, many have recovery over 100%.
      In terms oil, many knows bubble point death, but still majority believe viscosity is more important. That’s why few could believe heavier and more viscous shale oil from Uinta to Vaca Muerta could outproduce Permian.

      1. Sheng Wu,

        Not correct. It is normalized only for lateral length, perhaps prop loading doesn’t matter, I am not a petroleum engineer and there may be different opinions on this, I don’t have access to data to do my own analysis. Your claim that proppant loading does not matter may or may not be correct. In any case the point is the new well productivity may be decreasing rather than increasing as they run out of room in the productive areas of the Marcellus and Utica plays which are much smaller than the entire play, maybe a third of the entire area of the plays.

        1. D C,
          The normalized plot for Marcellus productivity by Mike probably is only normalized for lateral length, and Mike inadvaently added “prop load”.
          But, this is bad-apple picking as we all know in 2020-21 the Covid effect is there, the sharp fell off is probably a result of choke back.

          Last month, I digged out a latest plot by a energy consultant but now I can not find the link. See attached, and obviously things continue to improve after 2021. Note, this is probably not normalized to lateral length. Note
          1. the choke-back in 2021 for 2021 wells as well as other wells in 2024.
          2. the production profile difference here for Marcellus is different to Permian oil or Haynesville gas — the tail overall level for new wells also gets significantly higher than legacy wells.

          Here what I observed/guessed major shale gas and oil basin IP/EUR per foot here,
          1. Permian oil, IP stay the same or slightly up, EUR dropped 5~10% in past 3 years — similar to D C your plot last month, but this is almost 10% drop in 2022, and probably another 3~5% in 2023, and another 3~5% in 2024!!! much larger than the 2% drop D C put in your projection.
          2. Haynesville gas, IP same or slightly up, EUR dropped 2~5%/year in past years, this drop does not include the new monster wells in East Haynesville, which probably will lift the IP and EUR per foot significantly
          3. Marcellus gas, IP up slightly, and EUR up slightly. However, if zoom into the NEPA dry gas, the IP and EUR probably went up obviously by 3~5% each year. While, in SWPA and WV, the IP and EUR also went up obviously by 3~5%, but the starting numbers for SWPA and WV are much lower than the NEPA, so this dragged down the overall Marcellus. Operators would rather drill more in SWPA&WV because the abundant wet gas liquid there, and the shallower depth there makes the economics; while in the NEPA, dry gas price is probably even lower than SWPA, and they just focus on the limited tier 1 or 2 acreage and improve the frac loading etc.

          1. Sheng Wu,

            I think the cumulative well profiles are more interesting. Looking at your chart (Marcellus, I think) it does not look like there has been significant changes in the well profile since 2020, and note that the 2024 well profile likely has a number of wells with little data (those completed in December 2024. might have two months of data at most) so I would discount the accuracy of the 2024 well profile on the chart or simply ignore it.

            I do not see the improvement you speak of since 2021 and if we normalize for lateral length we would likely see a decrease in productivity per lateral foot.

            1. D C,
              The per foot productivity probably decrease a little, but this is because what I pointed above:
              1. more production are in SWPA and WV wet gas, where the initial gas IP and EUR is obviously lower than than NEPA dry gas. This will drag down the productivity.
              2. wet gas in SWPA and WV are also much shallower, and they could drill 5mile in 3 days and complete much faster and cheaper than rest. The wet gas NGL liquid will compensate for the low dry gas.
              3. The dry gas productivity per foot probably increased a little too, but still dragged down by the wet gas wells.

  5. Rig Report for the Week Ending March 28

    
– US Hz oil rigs decreased by 4 to 445. The count is also down 14 rigs from April 19, 2024 and is up 18 relative to its recent lowest count of 427 on July 24th. The rig count has broken out of the very tight range between 427 and 442 since July and hit a recent high of 449 last week. Is this week’s drop of 4 rigs linked to the drop in WTI from $80/b in Mid January to $69/b today?
    
– The New Mexico count dropped by 1 to 92 while the Texas Permian rigs dropped by 4 to 190 for a total Permian drop of 5 rigs.
    
– In New Mexico Lea was unchanged at 47 while Eddy dropped 1 to 45.
    
– In Texas, Midland added 1 to 28 and Martin dropped 2 to 26.
    – Eagle Ford was unchanged at 42.
    – Ohio’s rig count increased by 1 to 3.
    
– NG Hz rigs added 1 to 82 and have been at 81 ± 1 for the last 9 weeks.

    The Frac report will be posted when the data is published.

  6. Frac Spread Report for the Week Ending March 28

    The frac spread count dropped by 6 to 210. It is also down 51 from one year ago and down by 31 spreads since October 11. Note where the Frac spread count was a little over a year ago, March 8, 272. Quite a dramatic drop.

    The question that arises from looking at this morning numbers is whether the drop of 6 Frac spreads is the beginning of another round of weekly drops or whether 210 frac spreads may be the new equilibrium balance between fracs and rigs.

  7. Recent Permian tight oil estimate for 2024 has annual output at 5863 kb/d, the Permian tight oil scenario below is based on recent rig counts in the Permian Basin and historical rig count to completion rates. Permian URR is at about 43 Gb with a 2027 peak at annual average output of 6211 kb/d, with an annual average increase in output of 206 kb/d in 2025, 126 kb/d in 2026, and 16 kb/d in 2027. The URR is about 57% of the USGS mean TRR of 75 Gb for the Permian Basin.

    Cumulative output to Feb 2025 is about 14.7 Gb and wells completed at about 53k, if no wells were competed after Feb 2025 the URR would be about 21 Gb.

    1. Comparison of DC Scenario for Permian tight oil vs STEO (Annual average output in kb/d). Note that my estimate for recent Permian tight oil output in December 2024 is roughly 6000 kb/d, so roughly flat output in 2025 from the end of 2024 level of Permian output and only about a 200 kb/d increase over the next two years (from December 2024 to December 2026) for Permian tight oil output.

    2. So the people of the US can go on pretending everything is just fine for about 7 more years.

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