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Page added on July 5, 2014
USA Biggest Oil Producer After Overtaking Saudi Arabia
The U.S. will remain the world’s biggest oil producer this year after overtaking Saudi Arabia and Russia as extraction of energy from shale rock spurs the nation’s economic recovery, Bank of America Corp. said.
U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.
“The U.S. increase in supply is a very meaningful chunk of oil,” Francisco Blanch, the bank’s head of commodities research, said by phone from New York. “The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”
Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking. The surge in supply combined with restrictions on exporting crude is curbing the price of West Texas Intermediate, America’s oil benchmark. The U.S., the world’s largest oil consumer, still imported an average of 7.5 million barrels a day of crude in April, according to the Department of Energy’s statistical arm.
An oil drilling rig stands on the Bakken formation in Watford City, North Dakota.
Surpassing Saudi
U.S. oil output will surge to 13.1 million barrels a day in 2019 and plateau thereafter, according to the IEA, a Paris-based adviser to 29 nations. The country will lose its top-producer ranking at the start of the 2030s, the agency said in its World Energy Outlook in November.
“It’s very likely the U.S. stays as No. 1 producer for the rest of the year” as output is set to increase in the second half, Blanch said. Production growth outside the U.S. has been lower than the bank anticipated, keeping global oil prices high, he said.
Partly as a result of the shale boom, WTI futures on the New York Mercantile Exchange remain at a discount of about $7 a barrel to their European counterpart, the Brent contract on ICE Futures Europe’s London-based exchange. WTI was at $103.74 a barrel as of 4:13 p.m. London time.
Islamist Insurgency
“The shale production story is bigger than Iraqi production, but it hasn’t made the impact on prices you would expect,” said Blanch. “Typically such a large energy supply growth should bring prices lower, but in fact we’re not seeing that because the whole geopolitical situation outside the U.S. is dreadful.”
Territorial gains in northern Iraq by a group calling itself the Islamic State has spurred concerns that oil flows could be disrupted in the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. Exports from Libya have been reduced by protests, while Nigeria’s production is crimped by oil theft and sabotage.
Libya will resume exports as soon as possible from two oil ports in the country’s east after taking back control from rebels who blocked crude shipments for the past year, Mohamed Elharari, spokesman for the state-run National Oil Corp., said by phone yesterday from Tripoli.
The U.S. will consolidate its position as the world’s biggest producer in the coming months if returning Libyan supply limits the need for Saudi barrels, said Julian Lee, an oil strategist who writes for Bloomberg News First Word. The observations he makes are his own.
Record Investment
“There’s a very strong linkage between oil production growth, economic growth and wage growth across a range of U.S. states,” Blanch said. Annual investment in oil and gas in the country is at a record $200 billion, reaching 20 percent of the country’s total private fixed-structure spending for the first time, he said.
A U.S. Commerce Department decision to allow the overseas shipment of processed ultra-light oil called condensate has fanned speculation the nation may ease its four-decade ban on most crude exports. Pioneer Natural Resources Co. and Enterprise Products Partners LP will be allowed to export condensate, provided it is first subject to preliminary distillation, the companies said June 25.
The decision was “a positive first step” to dispersing the build-up of crude supply in North America, Bank of America said in a report on June 27. The U.S. could potentially have daily exports of 1 million barrels of crude, including 300,000 of condensate, by the end of the year, according to a June 25 report from Citigroup Inc.
39 Comments on "USA Biggest Oil Producer After Overtaking Saudi Arabia"
meld on Sat, 5th Jul 2014 6:33 am
Cool story bro!
Beery on Sat, 5th Jul 2014 7:45 am
They are just so desperate to spin scraping the bottom of the barrel as a positive.
Pops on Sat, 5th Jul 2014 7:53 am
“Annual investment in oil and gas in the country is at a record $200 billion, reaching 20 percent of the country’s total private fixed-structure spending for the first time, he said.”
Wow, that is pretty crazy. So essentially we are all going to be either hands on frack rigs or flipping their burgers and changing their sheets.
eugene on Sat, 5th Jul 2014 8:27 am
Just read an article in a Dallas newspaper re the US producing 8.4 million barrels a day. If one depends on news hype, you don’t have a clue. We live in an American age of BS and fairy tales. Whatever your viewpoint, you will find info to support it. Saw one where company is going to drill 3000 wells with 12 rigs.
I just miss The Oil Drum that had some common sense based on reality. This one will publish anything.
Newfie on Sat, 5th Jul 2014 9:30 am
The Shale Oil Boom.
Guess what ?
After the boom comes the bust.
tahoe1780 on Sat, 5th Jul 2014 9:55 am
What’s that old saying? $100 income – $95 expense = happiness. $100 income – $105 expense = unhappiness. So what if we produce more than SA and FSU? They use a fraction of what they produce. We use almost double of what we produce, and import from them. Who’s happier?
steve on Sat, 5th Jul 2014 10:13 am
Articles like this reinforce peoples beliefs and make me the “nut” for explaining peak oil to people….I am careful to explain EROEI the actual cost of of producing a barrel…the financing of this shale boom by the FED but in the end I am crazy for prepping and warning people of what is about to come!!! I was explaning to someone the other night that building a huge road to a house up in the mountains is an energy intensive waste of time and in no time that house will be obsolete. People started looking at me like I was a crazed hillbilly..
But I am expecting the STHTf no later than 2017 and I am willing to re-examine my beliefs and I could be wrong….I think it is wise to have a sense of humor about things and constantly keep checking up on your beliefs to see if they are correct…I was watching war of the worlds with my daughter the other day and I told her about people killing themselves thinking the world was about to end…
What I can’t understand is why people won’t even analyze Peak oil and will just go about their business and “trust” in a system that is no longer working…Liberals only want talk about climate change…and then it is only because they think it won’t effect them just some poor brown people and they feel sorry for them…and conservatives feel that oil replenishes itself….but I am the Nut Job!! I am hoping for 2017 because I need some more time to prepare…now where did I put that tinfoil hat?!!
Roman on Sat, 5th Jul 2014 11:11 am
Interesting news comming out on july 4. USA is # 1 again. Yay. Exept that oil is 10x more expensive.
Nony on Sat, 5th Jul 2014 11:36 am
Any way you cut it, the US has gone in a radically different direction than what the 2005-era peakers predicted. The honest ones fess up to that. Then you have those who just slink away and hide. Then you have the die-hards and the like here who somehow try to argue that it’s not oil or that rest of world, blabla.
Seriously, just go read the 2005 predictions from Campbell or the nose dive to the desert or the rest of that junk. Instead of looking for climate skeptics who are conspiracy minded, they should look at peakers. You all are some strange fish.
Dave Thompson on Sat, 5th Jul 2014 11:52 am
“Live here now” Guy McPherson. The predictions made by this Forbes piece are way out there.
Joe Clarkson on Sat, 5th Jul 2014 12:02 pm
Nony,
You are correct that fracking has increased the supply of oil. It may be that when oil gets expensive enough we can extract it out of kerogen rock or coal and thereby keep the peak at bay. At a high enough price we can make it out of the CO2 in the atmosphere.
No matter how it is done, the earth is finite, which means that the oil production rate(no matter how you define oil) is mathematically certain to peak at some point in time. The peak could be caused by any or all of a multitude of reasons, from economic to geological.
Although it should be obvious that foolishly basing our civilization’s energy supply on resources that will demand more and more effort to extract, I closely follow oil production because it is also a leading indicator of humanity’s adverse impact on the world ecosystem.
Perhaps others here, like me, are hoping that the peak comes sooner, rather than later, so that we don’t end up destroying the planet. If so, please don’t blame them for eagerly anticipating one of the best things that could happen to the world.
Dave on Sat, 5th Jul 2014 12:07 pm
Wow Nony what a bunch of BS. What we’re really looking at here is simply a conversion of oil resource to oil reserve, driven by price. That’s the same common denominator that has allowed the nasty tar sands deposits to be booked as “reserves”. A major problem with this is billions suffer under the weight of today’s oil price. Any significant price rise from here could easily trigger the next economic downturn as well. It’s true the high prices and the technology that comes with it, can delay the effects of peak oil, but it’s only delayed. Our collective failure to switch to renewables far quicker has a lot to do with our need to fund high priced hydrocarbon production.
Northwest Resident on Sat, 5th Jul 2014 12:17 pm
Here is Nony doing his “PapaSmurf light” routine, saying the same exact thing that PapaSmurf used to say — including all the references to failed peak oil predictions and heaping scorn and ridicule — just without the extreme nastiness.
Nony, why don’t you break out your two sock puppets Plantagent and MSN Fanboy and let them engage in a lively discussion on what Obama is to blame for, as you have done several times in the recent past? Your sock puppets make a lot more sense when they’re having their demented debates than you do in your post above.
BTW, we all know that PapaSmurf is your third sock puppet — but I don’t even want to speculate what appendage you wear that creepy puppet on.
Or, is Nony actually a sock puppet for Plantagent? It all gets so confusing…
Get some help, Nony.
J-Gav on Sat, 5th Jul 2014 12:28 pm
More MSM bafflegab. The ‘boost’ is real but will reveal itself to be fleeting, like so many good things …
baptised on Sat, 5th Jul 2014 12:56 pm
Coming from “Bank of America” the biggest American tax dodger of them all. Can you say irony-BS, BS-irony.
Arthur on Sat, 5th Jul 2014 12:56 pm
How are we going to bring this news to Richard Heinberg? The party is not over yet.
rockman on Sat, 5th Jul 2014 1:48 pm
“The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”
Once again econombabble. First, the oil patch has benefited greatly from the increase in the price of oil. The “U.S. recovery”? Not so much since the price increase is transferring about $500 billion more per year from all businesses and consumers not a part of the oil patch.
And how much would the consumers be paying for fuel today if we hadn’t had the shale boom? At lot less, in fact. One just has to follow the logic: the shale boom came about because of high oil prices. Had prices not increased 300%: no shale boom and lower fuel prices. Additional our balance of trade with respect oil was less when we were importing more: the decrease in import volume has been more then offset by the increase in oil prices. IOW we are sending more $’s out of the country for our oil then when we were importing more.
The good news: I doubt any consumer or business owner buys this BS: the reality slaps them in the face every time they pay for fuel. Just like every one in the oil patch is reminded of who is really benefiting when they get their fat paychecks.
BTW America: thank you for giving me and the boys those extra $TRILLIONS. We do appreciate your sacrifices.
Nony on Sat, 5th Jul 2014 2:03 pm
Rock:
you have a logic flaw. It is (very, very) possible to posit EVEN HIGHER prices without the shale boom. Simmons-like prices. Cambell-like prices. Yes, the primary benefit has been to producers and land-holders. But still, US shale may have kept us at 100/bbl instead of 120/bbl.
synapsid on Sat, 5th Jul 2014 2:18 pm
rockman,
“US production of crude oil, along with liquids separated from natural gas…”
I read that last part as NGL. Could the reference be to condensate instead?
pctech on Sat, 5th Jul 2014 2:33 pm
We should be seeing $1.50/gal soon! Awash in oil! 🙂 The article forgot to mention that still have import 8-9 mbd. Tight shale production curves would have go nearly straight up to really make much difference. Wait until Mideast mayhem results in oil production being interrupted.
GregT on Sat, 5th Jul 2014 3:52 pm
No, the party is definitely not over yet, but the longer it continues, the worse the hangover.
Harquebus on Sat, 5th Jul 2014 4:49 pm
Increases in the cost of production take a while to feed back into that production cost but, they do. The law of diminishing energy returns will trump political and economic ideology.
Calhoun on Sat, 5th Jul 2014 4:54 pm
Nony is correct that nobody in Peak Oil circles foresaw the LTO phenomenon, and I’ve read them all. He’s also right about Campbell’s forecasts being wrong about the date of peak. However, as Campbell often said, it’s not a matter of whether his numbers are wrong, he was certain they were wrong. The only question is how wrong. In other words, a peak in world oil production is inevitable — it will happen, though nobody can know exactly when. Given that the entire world outside of North America (in aggregate) is in decline (measured by C&C which is what really counts) the peak probably come when North America ceases to grow or when worldwide depletion rates exceed North America’s growth rate. I expect that fairly soon.
So unless the LTO folks can sustain their tremendous growth rate (which I believe is mathematically impossible), it won’t mean a whole lot other than to deplete what we have left that much faster.
So, hooray for America! We are pumping ourselves dry faster than anybody else! And when my son reaches my age and observes the state of the world I’ll put on my foam hand with the finger pointing up and the words “We Were #1!” on it and smile. Or cry.
Calhoun on Sat, 5th Jul 2014 5:00 pm
ps, It’s worth noting that not all peak oil advocates predicted an early peak. In his 2010 interview with Forbes, Charles Maxwell predicted a peak between 2015 and 2020 with his best guess being 2017 to 2018.
A bind is clearly coming. We think that the peak in production will actually occur in the period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018. That would suggest that around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today.
Link
What I find particularly interesting about Mr. Maxwell is that he is not a Peak Oil guru — I never heard of him before this article, he hasn’t written any books that I know of, he’s just a business guy who knows his beans about oil. And if he is right, then a few years of LTO happiness won’t do much for the generations to come.
J-Gav on Sat, 5th Jul 2014 5:21 pm
That Maxwell interview was just a bit after the beginning of the ‘fracking boom.’ I pretty much agreed with it at the time and still agree that by 2020 (maybe before), things should be clearer as to what direction future FF production will be taking. I hope your retirement plan is ‘rock-solid,’ Rockman. I hope mine is too by the way, though I’m not especially optimistic on that score …
Calhoun on Sat, 5th Jul 2014 5:53 pm
I recently read an account of the 1929 stock market crash. Interesting to see that as of 1927 many insiders were saying prices were way too high. They were wrong — for two years — then they were right.
rockman on Sat, 5th Jul 2014 6:59 pm
calhoun – I ‘ve known hundreds who were very aware of the shale potential. Virtually every Texas geologist and many reservoir engineers knew of the potential. I personally drilled and frac’d my first Eagle Ford well about 30 years ago. Abouy 20 years ago we knew how to horizontally drill and complete fractured reservoirs like the EFS. and showed it by developing the Austin Chalk into the hottest play on the planet. A play that eventually across 5X the area of the current EFS play. and all of knew exactly what it would take to go after the shales. And it wasn’t $35/bbl oil. And it still isn’t.
OTOH I suspect very few, if any gynocologists and shoe clerks understood either PO or the potential of the EFS if oil prices were to increase significantly. Just like so many armchair geolpgists/engineers/economists today really don’t understand the science or dynamics.
As far as my ” logic being flawed ” most here already understand why it’s absolutely correct. And since I’ve explained it in detail a number of times I won’t waste time with the obstinent again.
Hubert on Sat, 5th Jul 2014 7:46 pm
These idiots have lost their mind.
Perk Earl on Sat, 5th Jul 2014 8:57 pm
Next time I fill up here in CA for 4.39 a gallon for regular unleaded, I’ll remember this article and cryptically laugh.
Beery on Sat, 5th Jul 2014 9:28 pm
“No, the party is definitely not over yet, but the longer it continues, the worse the hangover.”
Or it gets so bad that the system shuts down. More than once as a bartender and night manager of a Youth Hotel, I saw people passed out and needing an ambulance due to alcohol poisoning. That’s what we’re doing to our society with this over-indulgence in oil. I fear we’re headed for system shutdown, not just a hangover.
Perk Earl on Sat, 5th Jul 2014 10:34 pm
Yeah Beery, ‘hangover’ is the worst case scenario term that can be imagined by a society spoiled by the oil age. Sociologically it’s considered bad form to use dystopian imagery, so hangover is the cornucopian accepted term for what happens post-collapse. A kind of woozy, nauseous feeling followed supposedly be immediately returning to BAU – LOL!
Nony on Sat, 5th Jul 2014 10:48 pm
Hey Rock, how many of your old Austin Chalk salts knew about the Marcellus? Knew that parts of it are cost competitive at $1/MCF? Why didn’t they buy up leases?
Northwest Resident on Sat, 5th Jul 2014 10:54 pm
“If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”
He should have said:
Nearly unaffordable prices at the pump have made this energy supply (shale oil) available.
Also, it is obviously true that many landowners and oil industry folks have made and are making some very fat paychecks on the shale boom. But from my point of view, they are not the main benefactors of the shale boom. The people who are benefiting the most would be people like you and me and others like us who are using this hyped up shale boom period to get ready for whatever comes AFTER the hyped up shale oil boom ends — which won’t be long from now. If it wasn’t for shale oil with all the hype to temporarily fill the gap between dwindling supply and greatly increasing demand, and to temporarily keep BAU chugging along, then who knows where I would be right now, or what the world would be like. We’ll find out soon enough, but shale oil has bought time for all of us to get ready to the best of our abilities.
Makati1 on Sat, 5th Jul 2014 11:12 pm
Typical holiday Ministry of Propaganda “feel good/exceptionalism” bullshit for the unthinking serfs.
shortonoil on Sun, 6th Jul 2014 8:25 am
Our interviews with energy analysis has brought us to the conclusion that the majority of them can not understand that they are comparing apples and oranges. They just don’t seem to be able to comprehend that a barrel of NGL is not the same thing as a barrel of light sweet crude. That in real terms (the energy delivery capability from liquid hydrocarbons) the US has not surpassed anyone!
But, that is only part of the story. Peakoilbarrel recently had a revealing presentation. What it shows is that if it was not for US shale production the world would have already Peaked in liquid hydrocarbon production. This presents a conundrum. What our analysis demonstrates is that shale production can not continue to increase at the rate it has experienced over the last few years, and that within three years depletion in theut rest of the world’s fields will over take it.
This is based on one result of our study that is unique to it; that is, production costs from this point forward must increase faster than price can increase. Shale wells, as a result of their inherently high decline rate, must be adding wells at an ever increasing rate to keep expanding production. That is not happening, cost constraints are now limiting the rate of new well development, and that situation will get worse as time progresses. The growth rate in shale production in the US is declining rapidly.
Stop by Ron’s site, his conclusions are startling. Understanding petroleum depletion requires an understanding of its energy dynamics, and that’s what we present. In no time at all, you can be a better analyst than the analysts. Don’t let that go to your head, in most cases, you are not competing against much competition!
http://www.thehillsgroup.org/
Calhoun on Sun, 6th Jul 2014 9:00 am
ROCK, first of all I didn’t say your logic was flawed, Nony did and he is wrong on that point. However, I did agree with him that nobody in the peak oil community was talking about LTO before 2010, and I don’t mean oil company insiders and geologists — of course they knew about it. I’m talking about the guys like Kunstler and Heinberg who have written all the popular books about peak oil.
And, despite the fact that they didn’t know about it (or at least didn’t write about it) it doesn’t mean they were wrong in the bigger picture. It just means their predictions were off. And my bigger point is that being off by five or ten years is of no consequence — once we are headed down it’s all over.
Davy on Sun, 6th Jul 2014 9:25 am
Short, in addition, one must remember the oil industry does not exist in a vacuum. When one considers the underlying limits of growth, diminishing returns on investments, debt bubble, political instability and many other predicaments we see a bifurcating energy dynamics in effect. So not only is cost going up because of bellow ground issues of lower quality liquid energy per dollar production effort invested but there is also the dynamics of all those supporting economic structures the FF industry depends on deteriorating. In effect we they are getting a “one two punch”. The financial capex compression is now accelerating just at the point the quality and cost of liquid energy production is declining. This is manifesting itself visibly now with poor returns by the oil majors. There has been a blitz of happy optimistic news by the lobby of plenty but number do not lie and the bad news is increasingly apparent. The real hammer will be the cost of money and its effect on the whole economic situation. At some point confidence will be under pressure. At some point bad news will really be bad news and not good news “spin”. At some point the cost of money will rise and there will be nothing the authorities will be able to do about it. When this happens will demand destruction or production destruction win out. They are both reinforcing in their relationships but economically price will react differently depending on supply and demand from the winner.
Nony on Sun, 6th Jul 2014 10:23 am
It was all known during the Austin Chalk. Nothing has improved since then. No improvement in steering, sensing, fracture fluid, proppant, liner perforation, etc. Nothing changed or improved. All known, all just a price game (this story sort of believable for oil, won’t work for gas though.)
George Mitchell and Nick Steinsberger…what a bunch of dummies with the Barnett. They didn’t need to experiment and learn late 90s, early 00s. It was all already known from the old Austin Chalk.
http://www.barnettshalenews.com/documents/2012/pres/Evolution%20of%20Barnett%20Shale%20by%20Nick%20Steinsberger%20March%202012.pdf
shortonoil on Sun, 6th Jul 2014 2:13 pm
Davey said:
“When this happens will demand destruction or production destruction win out.”
Unless the CBs can guarantee an unlimited amount of money to the end user for the purchase of petroleum products, supply constraints will be getting more critical. The cost of production must increase as petroleum becomes more difficult to extract. Drake drilled his first 63 foot well with a steam drill, and dipped the production out with a bucket on a rope. North Dakota wells are now 11,200 feet deep, and require a vast infrastructure of supplies, trucks, frac’ing equipment, and man power. The cost of producing petroleum, and its products has been on a way one trip since the first barrel was extracted.
Because producers can not operate for long at a loss, and cost is always going up, prices must increase to compensate. As long as the product received is capable of supporting the economic activity required to pay for the increased price that can continue. In 2012, as a result of energy factors, that changed. It was the energy half way point. It was the point where it took one half of the available energy from a barrel of oil to extract the oil, and produce its products. From that point forward the consumer could no longer afford to pay for the additional cost of production. That tiny increased increment must then be lost to demand.
But in a debt based currency system there is a temporary escape valve; debt. The CBs print currency, that becomes debt on their balance sheet, and loan, or gives it to the end user. The end user then uses it to pay for the higher priced oil. But debt has a caveat attached. It is assumed that it will be paid back in the future. The problem now is that when the energy half way point was reached it was guaranteed that the debt created could never be repaid. When the holders of debt begin to realize that they will never get their money back, you have financial crisis, and the system collapses. That is exactly what the CBs are now trying to prevent, delay, or stall. Checkmate!
http://www.thehillsgroup.org/