Jan. 20—2023 is expected to be a national record year for oil production and analysts say the Permian Basin will be in the forefront.

The U.S. Energy Information Administration predicts that 12.5 million barrels per day will be reached nationally this year, beating 2019's record 11.85 mbd, and the Baker Hughes Corp. reports that 620 rigs were in action at the end of '22, up by 140 from the previous year-end.

The Basin is pumping 5.6 mbd now, another record, and the EIA says that'll go at least one notch higher.

"It appears that a new national record will be set," said Waco economist Ray Perryman. "In fact, I think there's a good chance it will go higher than 12.5 mbd.

"But if the U.S. and global economies slow down markedly, lower demand for crude oil will lead to falling prices and less incentive to increase production."

Calling oil market-watchers possibly too pessimistic, Perryman said, "At this point I think any recession will be relatively mild and short-lived and that the headlines are overplaying the risks to some extent.

"As long as Russian oil is off the market for many countries, prices will stay relatively elevated, encouraging production. And now that China is opening up its economy, demand for energy will increase. This pattern will likely divert some OPEC oil."

The EIA says production here will boom by 440,000 barrels per day this year and achieve 5.7 mbd.

"It's hard to believe that 15 years ago production was down to 700,000 bd and the region was being written off," Perryman said. "One reason for this increase is that natural gas pipelines are being completed that will increase the takeaway capacity for associated gas. The inability to transport natural gas to market is a potential constraint on production that's now being resolved.

"Moreover, selling this gas improves the economics of development and production. As one of the lowest-cost production areas, the Basin should continue to outperform overall national trends."

Permian Basin International Oil Show President Larry Richards says a combination of new technology, innovation and increased takeaway capacity is making it happen.

"We've successfully installed a lot of new oil and gas pipeline infrastructure across the Permian since 2019, which helps our area versus competing basins," Richards said.

"Headwinds will include a tougher, slower regulatory environment, changing regulations and the service sector's inability to access capital. Unlike major oil companies, most service companies are financed by banks and private equity."

Richards said the banks and private equity firms "have been reluctant to invest new capital based on the bruising they took during the last cycle and an administration that is actively discouraging investment."

However, he said the industry has always found ways to surmount obstacles. "We're used to fighting our way through these cycles and we have learned how to ramp up quickly while investing in new employees, technology and safety," Richards said.

"What is unusual is the reluctance of banks to extend term debt to growing service companies, which has slowed access to crews and new equipment."

He said price stability will be the most important factor. "Most of the oil basins in the U.S. are profitable with prices in the $70 per-barrel range and unprofitable at $50, especially with the rising service costs," Richards said. "The key will be if producers can maintain the financial discipline they've held for the past two years, keeping OPEC and their ability to flood the market and kill competition on the sidelines."

The price of West Texas Intermediate Crude Thursday was $80.18 per barrel.

Texas Oil & Gas Association President Todd Staples said from Austin that smart policies are needed at the state and federal levels to continue growth and maintain Texas' position as the world's energy capital.

"We need an energy plan for America that allows for timely permit approval, seamless leasing of federal lands and a recognition that oil and natural gas are indispensable to our energy future," Staples said. "For Texas, statutes need to encourage oil and natural gas investment and innovation."

Panhandle Producers & Royalty Owners President Judy Stark said the record will be secured by the 350 rigs that are active in the Basin now.

"I expect production will increase slightly and support continued drilling," Stark said from Amarillo. "The main factors in lowering or increasing the rig count will be the cost of goods and services, which has increased exponentially since our last boom in 2014 when per-barrel prices were comparable.

"Supply chain issues are still problematic, prices, wages and employment are higher and there is push-back from investors and environmental, social and governance factors, although relief is getting better.

"The Biden administration's war against fossil fuels will continue to cause problems."

Amarillo economist Karr Ingham said growth stalled last year and failed to reach 13 mbd for a variety of reasons. "The timeframe for U.S. production to reach 13 mbd-plus has repeatedly been pushed back and the EIA does not expect it till November 2024, nearly two years from now," Ingham said.

"That assumes the forecasts generally come true and are unaltered by market events in '23 and '24."

Barring a recession, he said, production will keep booming. "While a recession is by no means a certainty, there is the significant possibility," he said.

"I have Permian production at over 5.6 mbd at present and climbing. The Permian continues to flex its muscle in oil and gas production and its share of U.S. production is climbing to over 45 percent right now."

Ingham said the Basin is the only major region in the country to have fully recovered lost COVID production. "Railroad Commission District 8, Midland, is the only RRC district in Texas to be growing production," he said.

"So the load is being shouldered by District 8 and Lea and Eddy Counties in New Mexico, which helps to explain why recovery has been slow."

Ingham said supply chains' post-COVID recovery and "slow and plodding labor markets" have also figured in along with restrictions in the federal lands and waters that accounted for 25 percent of pre-COVID production.