Hydrocarbons: North America's Breakthrough

North America is gaining prominence in hydrocarbons, with a record production in the United States and Canada in 2023. The United States has added an average of nearly one million barrels per day this year compared to last year, according to Rystad Energy. This represents an increase of over 8% in drilled volumes, surpassing 13 million barrels per day by the end of the year.

"The pace of shale growth in 2023 remained strong, despite a significant reduction in the number of drilling rigs during the year, and greater attention to preserving stocks," notes the research company. "As the industry recovered from rampant cost inflation and supply chain bottlenecks, a general 'unblocking' of oil activity allowed many companies to produce volumes more in line with their fundamental activity rates."

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Interdependence

Neighboring Canada is also producing at unprecedented levels, with 4.9 million barrels per day compared to 2 million barrels per day twenty years ago. "The oil sands have made Canada the fourth-largest global producer and the largest foreign supplier of oil to the United States," notes an S&P report.

The two countries have also become more interdependent. The United States imports twice as much oil from Canada as fifteen years ago (3.9 million barrels per day, compared to 1.9), to fuel refineries equipped to process heavy oil. Thus, 60% of U.S. crude oil imports come from their northern neighbor. In a market where OPEC countries have reduced their volumes to maintain prices, North America's market share has increased. "North America—the United States and Canada—produced more oil and gas than any other region in the world in 2023, including the Middle East," notes S&P Global. The United States accounted for approximately 16% of global crude oil production this year, compared to 11% in 2017, according to Rystad Energy. Saudi Arabia, on the other hand, saw its market share drop to around 11%. Russia, despite being targeted by international sanctions, only slightly decreased its share, to around 13%.

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Boosting Competitiveness

Beyond supply security, with production exceeding consumption, the surge in prices in 2022 has allowed the United States to boost the competitiveness of downstream industries.

Producers have not been very vocal about their drilling plans for next year, but the growth rate is expected to slow down, according to Rystad Energy. The research company predicts the addition of nearly half a million barrels of oil per day on average in the United States in 2024. This represents a 4% increase in production compared to this year.

The idea is not to produce for the sake of production but to take advantage of financial discipline and cash flows generated in recent years to reinvest reasonably—without losing sight of profits and shareholder returns. Large companies are also now seeking to build reserves, especially domestically.

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LNG Facilities

Meanwhile, gas production will have increased on average by 4% this year in the United States, or 4 billion cubic feet per day, reaching nearly 104 billion (2.9 billion cubic meters). The curve is expected to flatten in 2024, with growth of just over 1% next year. This will largely be realized in the second half of the year, with the prospect of "the commissioning of pipelines and the start-up of LNG facilities in 2025."

The U.S. market is consolidating, with a series of "megadeals" announced in recent months. In October, ExxonMobil spent $60 billion to acquire Pioneer, a shale gas and oil specialist in Texas. Arch-rival Chevron, meanwhile, put $53 billion on the table to take control of Hess, well-established in Guyana. Finally, Oxy acquired CrownRock for $12 billion. This last operation "will create the sixth-largest U.S. producer, soon producing 1 million barrels of oil equivalent per day, the others being Chevron, EOG, ExxonMobil, EQT, and ConocoPhillips," notes Wood Mackenzie.