US oil production up, foreign oil imports down

 

Today’s US jobs report was disappointing, and points to an economy that is still struggling.

What about the oil sector? Politicians complain about the slow issuing of drilling permits in the Gulf of Mexico in the wake of BP’s Macondo well disaster, and the Oil Lobby is pushing hard for the federal government to open up new domestic areas for drilling in the Gulf, off the East Coast, and in Alaska.

Is oil production down?

Far from it. Between 2008 and the end of 2010, domestic crude oil production rose more than 11% and production of natural gas liquids (NGLs) grew by more than 12%. The increase in US production made up for about half of the decline in petroleum imports (1.7 million barrels per day) over this time period. Of this production, about 94% was delivered not by Big Oil, but by many independent oil and gas producers (such as Energen, Linn Energy, NGAS Resources, and Questar).

In 2010 domestically produced oil and NGLs hit 7.5 million barrels per day, the highest output in eight years. The increase in production led to a reduction of net imports of crude oil and NGLs to 9.4 million barrels per day, the lowest figure in 13 years. According to the Independent Petroleum Association of America (IPAA) without this increase in domestic production, the US oil import bill in 2010 would have been $20 billion higher (calculated at 2010 average price levels).

2011 has picked up where 2010 left off. According to the Baker Hughes Rig Report, there were 1,886 drilling rigs in operation across the US in early July 2011, up 329 from early July in the previous year.

A report by Credit Suisse analysts in March forecasted that the US will be producing an additional 2.5 million barrels per day by 2016, based on the development of new onshore fields (such as the Bakken shale in North Dakota and the Eagle Ford shale in Texas) and deepwater projects in the Gulf of Mexico.

Despite restrictions on opening up exploration areas in the Outer Continental Shelf, if oil prices stay high and the anti-fracking forces don’t stymie their drilling activities then it will continue to be Drill Baby Drill time for US oil independents, and foreign imports will continue to fall.

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Photo by Michael Glasgow used under a Creative Commons license.
Stuart Hampton

British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover's since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Daniel Yergin's "The Prize." You can also follow Stuart on Twitter.

Read more articles by Stuart Hampton.

Comments

  1. Tim Kearney says:

    Hello Mr. Hampton,
    We’re having debates here in the U.S. leading up to the elections in November. Our local Congressman wrote that U.S. production down and our dependence on foreign subsidies is increasing. In my rebuttal I used your article to counter his claims. The other issue I mentioned for the price hikes at the pump was, the role that oil futures speculating markets is having on price fluctuation.
    There is also tremendous pressure being exerted to continue to allow the construction of the “Keystone” oil pipeline. On the surface this would sound like a good idea. However, with recent spills along the Yellow Stone River and the Kalamazoo River (7/2010) that still not cleaned up, I could not support further construction. The “Tar sands” are heavier and the chemical used in facilitation of the pipeline process are too dangerous for people,wildlife and the environment. What is your feeling on what this process? Thank You, Tim Kearney- outside Las Vegas, NV.

  2. Stuart Hampton says:

    @ Tim Kearney,

    Thank you for your interesting comment and for citing my post.

    One problem with our current political discourse is that policy positions of many candidates are determined and delivered for their emotive sound bite resonance, many completely independent of facts.

    As to oil sands, I agree that it is one of the most toxic and heaviest of crude oils. It is not that the Keystone pipeline would be unsafe (the US is criss-crossed with thousands of miles of crude pipe, some of which carry tar sands oil), but that there are so many cleaner alternatives available, including the Pickens Plan with its push to have trucks use natural gas. If natural gas was the dominate the HGV fuel market, the import of oil sands crude may not be needed.

    Regards,

    Stuart

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