The US now leads the world in petroleum production
STEVE AUSTIN | 2014/08/04
OPEC, the United States of America is here, and how. As the top oil producing nation for 2014, the U.S. has steadily left the world behind. Who said oil in the US was always under sempiternal stormy weather? Play a serenade.
According to the latest estimates, the U.S. is bypassing not only oil behemoth Saudi Arabia but also slapdash Russia. So, from positions No.1 and No.2 as leading oil producing nations, Saudi Arabia and Russia are effectively knocked off the pedestal.
U.S. crude oil production, including the liquids separated from Natural Gas, outperformed other countries with daily output exceeding eleven million barrels in the first quarter of this year. Indeed, this is the highest in the world, for all the countries, for the first quarter of the year. Well, the eleven million barrels is also the highest volume produced by the country in twenty four years. And, for good measure, it is expected that the U.S. will stay as the No. 1 Producer for the rest of 2014, as oil production is expected to increase in the second half too. The U.S., to look back at history, became the world's largest natural oil producer in 2010 itself. In June, according to the International Energy Agency, the country had become the biggest producer of oil and natural gas liquids.
As (almost) everyone in the U.S. knows, this has been achieved on the back of robust boom in the energy extraction from shale rocks. Speaking anything (or writing anything, for that matter), would still underestimate the role of Shale boom in these energy developments. In case the U.S. didn't have Shale to fall back on, and taking into account the political situations in some oil producing countries, oil prices would have been a tad beyond the reach of an ordinary citizen. A scenario unimaginable; the tone apocalyptic, so why say?
States such as Texas and North Dakota lead in the extraction of oil from shale formations. Using advanced techniques in hydraulic fracking, oil companies spit rocks using high-pressure liquid or use directional drilling technology to extract oil. The nation produced 8.4 million barrels a day of oil in April 2014, the highest monthly volume in more than two decades, of which Texas and North Dakota accounted for more than half the total. To split up, Texas produced more than one million barrels per day, doubling and tripling their production respectively in the past three years. The domestic output, added with the curbs on export of crude, is helping ease the price of West Texas Intermediate (WTI), the oil benchmark of the US. WTI futures will still maintain the current discount of $7 per barrel to Brent Crude Futures. Nevertheless, to put things in perspective (and not get too carried away), the US still imported about 7. 5 million barrels of crude a day in April, according to the Department of Energy.
According to the International Energy Agency (IEA), oil output in the US will increase to 13.1 million barrels a day in 2019 before leveling off. IEA predicts that the US would enjoy the top ranking as a producer till 2030 only due to resource depletion as oil is a non-renewable source of energy. Then, the Middle-East may re-emerge to dominate the oil scene again. But, those days are far off. For now though, on the energy field at least, things are as rosy as they look. In fact, a decision of a U.S. Commerce Department to allow overseas shipment of processed ultra-light oil (condensate) raises hopes of the nation lifting a four-decade long impractical ban on crude exports. Journeyed in the right direction, where it's headed now, North America will relive the build-up of crude supply. Should that happen, the U.S. will have daily exports of one million barrels of crude by the end of the year, according to a report.
Staying with the good news, annual investment in Oil and Gas is also seeing boom times with a record $200 billion, or about twenty percent of the total private fixed-structure spending. A first!
Global oil prices
However for the rest of the world, things are still as they are-pretty much. The production growth outside the US has been lower than anticipated, which has kept the global oil prices high.
Also, usually any unrest in any of the oil producing countries shakes up the speculators making the oil prices bit too tipsy. That the good news of U.S. oil production hasn't caused any ripple in the global market can be attributed largely to the Geo-political and unusual situations in countries like Iraq, Libya and Nigeria. In Iraq, militant group Islamic State of Iraq and al-Shaam (ISIS) has raised alarm bells regarding oil flows from the second-largest Producer of OPEC (after Saudi Arabia). Infrastructure woes including theft and sabotage have blighted oil industry in Nigeria whereas political unrest and protests in Libya have led to reduced oil production.
Yet, from the perspective of the U.S., with reduced dependence on oil imports, the nation can heave a sigh of relief on energy security. Perhaps gone are the days when a sniff or sneeze in Iran affected the gas prices at the pumps in the US. Well, with low energy prices, the US economy has a mighty reason to prosper.
Published on 2014/08/04 by STEVE AUSTIN