Texas Leads U.S. Oil Production to 43 Year High

It’s no secret that U.S. oil production has trended skyward over the past decade; in fact we are now the number one producer of oil (and natural gas) in the world, thanks to hydraulic fracturing. But last year, the United State hit a major mile. According to a report released this week by the U.S. Energy Information Administration, U.S crude oil production in 2015 reached its highest level since 1972. Averaging about 9.42 million barrels per day (b/d) in 2015, this boost in production was led by an enormous production increase in Texas from 2014 to 2015.

EIA U.S. Oil Field Production of Crude Oil

EIA U.S. Oil Field Production of Crude Oil

According to the report, more than three-fourths of U.S. production increase stemmed from three main areas: Texas, the Gulf of Mexico and North Dakota. As the report states:

“In 2015, production gains were highest in Texas, the Gulf of Mexico, and North Dakota, as these three regions accounted for 77% of the U.S. total increase.”

Texas though, outshined the rest – both in terms of production increase and total crude production. According to the report:

“States or areas with the highest volumes of production also saw the largest gains in 2015. Texas is by far the largest crude oil-producing state, providing 3.46 million b/d in 2015, the highest level since at least 1981, when EIA’s state-level productions series began.”

The report continues:

“Production in Texas grew by 289,000 b/d in 2015, the largest increase of any state.”

EIA Change in Crude Oil Production by State or Area (2015 versus 2014)

EIA Change in Crude Oil Production by State or Area (2015 versus 2014)

There are several reasons for both this increase in crude production nationally, and in Texas specifically. Most notably, innovation in the fracking process has led to a massive increase in efficiency. This is nothing new, as we’ve reported before, but the numbers are nonetheless staggering. As an EIA report from earlier this year found, initial production rates of tight oil formations continue to rise across the country – and have done so for almost the past decade. According to the report:

“The average new well in each of these regions produces more oil than previous wells drilled in the same region, a trend that has continued for nine consecutive years.”

This increase in initial production, along with rising production rates through the life of the well, is thanks to innovation in the fracking process. As the report continues:

“The increasing prevalence of hydraulic fracturing and horizontal drilling, along with improvements in well completions and the ability to drill longer laterals, has greatly improved well productivity.”

This finding, that advancements in drilling technology and techniques has allowed U.S. operators to produce more with less, is supported by a report from energy consultancy Wood Mackenzie released in July. According to Wood Mackenzie, the cost of production for U.S. operators has fallen by roughly 40 percent over just the past two years thanks to improved development efficiency and cost reduction efforts throughout the process.

But this begs the question, with efficiency leading to greater production volumes across the board, why is it that Texas specifically has seen the greatest relative increase in production? The answer is simple: geology.

Texas has long been known for its wealth of natural resources, but the Permian and Eagle Ford shales, with the help of fracking, are proving to be world-class oil and gas plays even in this difficult price environment. Current estimates of prove crude oil and condensate reserves in Texas top 14 billion barrels, with 2.1 billion barrels in new proved reserves added in 2014 stemming mostly from the Permian Basin and Eagle Ford.

This development efficiency, coupled with the massive reserves found in Texas, has not only meant a significant rise in production, but also a revival of drilling activity in Texas. As a Bloomberg article from earlier this year pointed out, 24 of the 26 most profitable places to drill in the U.S. – at even a $30 per barrel price point – are found the Eagle Ford and Permian. Additionally, the Permian Basin alone is currently home to 218 active drilling rigs, up an amazing 81 rigs since May.

Even at current commodity prices, this impressive production is expected to continue. The EIA is projecting that crude oil prices will average about $48 per barrel going into 2017 – a far cry from the $90+ price environment from just a few years ago. But while prices may have dropped, operators have continued to innovate and the EIA estimates that U.S. crude oil production in 2017 will be roughly on par with the 8.76 million barrels produced in 2014.


While blessed with abundant natural resources, the United States is also blessed with a drive for innovation. This drive for innovation in oil and gas development has allowed U.S. producers to weather the storm of low commodity prices, helping America maintain its position as a global energy superpower.

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