Industry News - Summer 2023

Welcome New CISTAR Industry Member, Precision Combustion, Inc. Texas and New Mexico (Permian) lead US Natural Gas, NGL and Crude Oil Production Growth

Welcome new CISTAR Industry Member, Precision Combustion, Inc.!

Precision Combustion, Inc. joined CISTAR's industrial consortium in July of this year. 
According to their website: Precision Combustion, Inc. is a privately held corporation, founded in 1986 located in North Haven, Connecticut, USA. Our site contains catalyst formulation, coating, and reactor manufacturing facilities as well as multiple advanced test rigs supported by a team of experienced engineers, technicians, and machinists. PCI has distinctive skills in advanced catalytic reactor, sorbent module, and system design and in catalyst formulation, coating, and supports. 

Texas and New Mexico (Permian) lead US Natural Gas, NGL and Crude Oil Production Growth

Bruce Cook, CISTAR, Research and Industry Advisor


Figure 1: Major US shale resource basins

Natural Gas Production: The Permian Basin (Figure 1) is a productive oil and gas basin located on the border of West Texas and eastern New Mexico.  The Permian Basin is the largest oil-producing and second-largest natural gas-producing basin in the United States.   Appalachia is the largest natural gas-producing basin.    In June EIA1 reported that natural gas production in the Permian region established a new record in 2022.   Permian Natural gas is co-produced with crude oil and continued high crude oil prices have been the chief economic driver for Permian natural gas production growth despite recent declines in Henry Hub Natural Gas prices.    Figure 2 shows Permian gross natural gas production for the last 10 years.  Gross natural gas is gas produced at the wellhead along with crude oil and includes dry natural gas (predominantly methane), NGL’s (C2 to C5 hydrocarbons) and non-hydrocarbon gases.  Wellhead gas may be processed to make marketable Dry Natural Gas and NGL’s or it can be reinjected, vented, or flared.   Dry natural gas production in the Permian also set a record high of 17.7 BCF/D in March 2023.  


Figure 2: Gross natural gas withdrawals, Permian region (Jan. 2013 - April 2023)


NGL Production: NGL production from Inland Texas and New Mexico continues to grow, with average daily production of ~3.5 million barrels/day in March 2023.  This represents 56% of the total U.S. NGL production 6.2 million barrels.  As reported in the previous CISTAR newsletter2, abundant U.S. ethane resources have led to significant expansion of U.S. ethylene cracker capacity and a complete transition to ethane feedstocks for all new cracker capacity.  The impact of this cracker expansion is evidenced in EIA’s report3 that ethane domestic demand grew 9% in 2022 (see Figure 3) to nearly 2 million barrels a day.    


Figure 3: U.S. monthly ethane demand (2010-2022)


In addition to increased domestic demand, growing international demand for ethane and the development of significant export facilities and ships have caused U.S.  ethane exports to increase to record levels.  EIA projects3 U.S. ethane consumption to average 2.1 million b/d in 2023 and 2024 and ethane exports will grow to average 500,000 b/d by December 2024.   With growing U.S. exports, new capacity for cracking ethane is being added in Europe and Asia.  Currently, China and India are the largest importers of U.S. ethane exports outside of North America (Figure 4A)4.   U.S. Propane exports5 (Figure 4B) have been consistently high reaching a record monthly level of reached a record 1.7 million barrels per day in March 2023.


Figure 4A: US Ethane Exports



Figure 4B: US Propane Exports


Planned Increases to Permian Midstream Infrastructure: Needed additional natural gas processing and pipeline infrastructure will be coming online to support continued Permian production growth in the coming years, but midstream infrastructure will be challenged to stay ahead of projected processing growth.  This is especially important as producers are committed to reducing GHG emissions as well as flaring.   Oil and Gas Journal in June, 20236 reported that 1.4+ BCF/D of new natural gas processing capacity will be coming online in the Permian in 2023 and 2024.   In addition to processing capability, takeaway pipeline capacity is also once again becoming an issue.  Pipeline limits have resulted in Waha, Texas spot NG prices occasionally dipping into negative territory starting in 4Q2022.  Significant (4+ BCF/D) new eastbound pipeline NG takeaway capacity is slated to come online by 3Q2024.  


Crude Oil Production: In May 2023, EIA reported7 that U.S. crude oil production (crude oil and lease condensate) grew 5.6% (0.6 million b/d) in 2022 to 11.9 million b/d.  Texas and New Mexico, largely due to the Permian basin, which is in both states, contributed the most to this growth.  New Mexico for the third straight year saw the biggest percentage increase in production of any U.S. state.  New Mexico crude oil production grew 0.3 million b/d for an average production of 1.6 million b/d for 2022.   Texas and New Mexico now produce approximately half of crude oil in the U.S. (see Figure 5).


Figure 5: Annual crude oil production, United States (1982-2022)



  1. N. Ameen, “Natural gas production in the Permian region established a new record in 2022”, EIA Today in Energy, June 13, 2023.
  2. B. Cook,  “US NGL and Ethylene Industry Continues to Expand” CISTAR Newsletter  Fall, 2022.
  3. J. Young, “U.S. ethane demand grew 9% in 2022, driven by petrochemical capacity additions”, EIA Today in Energy, March 13, 2023.
  4. “U.S. ethane consumption and exports continue to grow”, EIA This Week in Petroleum, June 1, 2023.
  5. J. Eiermann, “Monthly U.S. propane exports in March 2023 reach a record high.” EIA Today in Energy, June 6, 2023
  6. C. E. Smith, “Permian Gas Midstream Racing to Stay Ahead of Production”, Oil and Gas Journal, June 5, 2023.
  7. M. Roman, “Texas and New Mexico led U.S. crude oil production in 2022”, EIA Today in Energy, May 18, 2023.