West Texas Oil Production May Soon Rival Kuwait
The Permian Basin is once again stunning observers of energy development in the United States. As we’ve mentioned before, the once dying oil field of West Texas now accounts for about two-thirds of crude oil production in Texas and nearly 15 percent of all U.S. production. Enhanced methods of recovery, including hydraulic fracturing and horizontal drilling, have led to a revitalization of the Permian Basin and opened up new opportunities for development — allowing West Texas to become one of the fastest growing production areas in the country.
More recently, new information shows that the Permian might out-produce one of OPEC’s largest producers in the coming years. In a report highlighted on Commodities Now, Tudor Pickering Holt & Co. predict that by 2025, “oil production [in the Permian Basin] is projected to more than double to more than 3 million barrels per day.”
To put that in perspective, three million barrels per day is on par with the daily output of Kuwait – the third largest producer of oil in OPEC!
Also, as Dr. Mark Perry points out on his Carpe Diem blog,
“Oil output has increased so significantly in Texas in recent years that if it was considered as a separate oil-producing country, Texas would have been the 11th largest oil-producing nation in the world for crude oil output in April (most recent month available for international oil production data) – just slightly behind No. 10 Mexico at 2.56 million bpd. At the current pace of output increases, Texas oil production will likely surpass 3 million bpd by the end of the year and surpass Kuwait, Mexico, UAE, and Iraq to move up to become the equivalent of the 8th largest oil-producing ‘nation’ in the world.”
The economic benefits of America’s shale revolution – direct and indirect high-paying jobs, increased tax revenues, and lower energy costs – have been widely reported. But these data show that U.S. oil and natural gas production is growing at a pace that surprises even the most optimistic among us.
EIA just released production data for the month of June by state, and Texas continues to be the number one oil state in America, producing approximately 2.6 million barrels per day, roughly one-third of all U.S. oil production. This is just after the EIA released data on May production, when Texas’ daily oil output was shown to have doubled in a little more than two years. That’s the highest daily output the state has experienced since April 1982.
One more piece of great news to report this week thanks to the shale revolution: IHS reports that shale development has “increased disposable income by an average of $1,200 per US household in 2012 in the form of lower energy bills as well as lower costs for all other goods and services.” That number, according to IHS, is expected to grow to more than $3,500 in 2025.
This demonstrates once again that the economic and employment contributions from shale oil and gas development continue to be felt broadly throughout the U.S. economy – and Texans can be proud that our state continues to lead the way.