Investors are still demanding higher returns from oil companies first and foremost, putting a brake on significant gains in US production going forward.
Capital discipline and supply chain bottlenecks weighed on growth last year, according to speakers at the Argus Americas Crude Summit in Houston, Texas, and top executives warned that drilling times for some projects from start to finish more than doubled. More of the same is expected in 2023.
"I suspect there are still challenges, maybe inflation related, that aren't fully understood," said Dan House, North America trading manager at SOCAR Trading. "It's a difficult space to expect a big type of response even if there was a call."
The Paris-based IEA is forecasting an increase of 600-700,000 b/d this year in US crude production, driven by shale and the Permian in particular.
"There's some risks," said Jacob Messing with IEA's oil markets division. "And of course, to get these barrels out of the ground you need to invest."
The past two drilling downturns resulted in a significant restructuring in the industry, with deleveraged balance sheets and the entry of new equity holders.
"These equity holders have demanded substantial capital discipline and I think that's what they received," said Mary Kogut, a partner at law firm Kirkland & Ellis.
The rig count and activity levels over the past year have been fairly constant, which "means we're at this point not in a period of a big uptick in production," she said.
Companies that are successfully returning their cash windfalls from higher oil prices to shareholders are also being rewarded on Wall Street, which also mitigates against any big uptick in output.
As well as showing restraint, a lack of spare capacity in terms of hydraulic fracturing crews is also holding firms back.
"We are really seeing a more mature industry now," said Messing, trying to become more stable and reduce the volatility seen in the past when prices have been high.
