EIA: U.S. is Officially World’s Top Crude Oil Producer
The U.S. Energy Information Administration (EIA) reported today that the United States “likely” overtook Russia and Saudi Arabia earlier this year to become the world’s top crude oil producer. As EIA reported:
“In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.”
Though this achievement isn’t a surprise, as EIA announced earlier this year that it expected the U.S. to claim the title of world’s top crude oil producer, it’s important to remember that this feat would have been unimaginable just 10 years ago. But thanks to advancements in horizontal drilling and hydraulic fracturing technology – which unleashed previously inaccessible “tight oil” formations throughout the country – the United States saw year-over-year production increase for the first time in 18 years in 2009 and hasn’t looked back since.
With the exception of a brief downturn in 2016 as result of OPEC’s ultimately failed attempt to drive out the U.S. shale industry by maximizing its production and driving down prices, the United States has seen a dramatic upward trajectory in production over the past 10 years.
And ever since OPEC waved the white flag on its price war a couple years ago, U.S. tight oil producers have emerged stronger than ever, thanks largely to improved technology and efficiency. As EIA noted:
“The oil price decline in mid-2014 resulted in U.S. producers reducing their costs and temporarily scaling back crude oil production. However, after crude oil prices increased in early 2016, investment and production began increasing later that year. By comparison, Russia and Saudi Arabia have maintained relatively steady crude oil production growth in recent years.”
Now the big question moving forward is how high can U.S. production go? The latest EIA forecast projects domestic production will average a record 10.7 million barrels per day (b/d) in 2018 and jump to 11.5 million b/d in 2019.
As the following EIA chart shows, the Permian Basin is expected to continue to drive production growth through 2019. However, the latest EIA data show production is on the rise in each of the United States’ six major tight oil plays.
Not only has fracking allowed the U.S. to reclaim its crown as the world’s top crude oil producer for the first time since the early 1970s, it has also allowed us to became a major exporter and decrease our net imports of crude and petroleum products 70 percent since 2005.
America’s newfound energy abundance is a major reason the country has enjoyed nine consecutive years of economic growth. And thanks to increased natural gas use, we are also leading the world in carbon dioxide reductions since 2005. All of this has been made possible thanks to fracking — and the best may be yet to come.