The rapid rise in US oil rig productivity points to a future challenge to its newfound influence in global energy markets

The rapid rise in US oil rig productivity points to a future challenge to its newfound influence in global energy markets. US oil production outcomes are a tug of war between output from new wells and the decline in the productivity of legacy wells. The chart (drawn from US Energy Information Agency statistics) shows the rapid increase in the productivity of new wells in the Bakken region as an example. Productivity improvements have come with experience in using new production techniques. In the short term, this has led to reduced costs as well as higher production. Both have a potentially negative effect on crude oil prices. The gap between new well production and the loss of output from legacy wells has grown from being negligible seven years ago, when the EIA started to compile these statistics, to being at its widest currently. As losses from legacy wells - currently more than 2 million barrels a month - begin to rise more rapidly, new well production will have to compensate.