U.S. Assumes Top Spot as Worlds Crude Oil Production Leader

Texas Insider Report: WASHINGTON D.C. Ever since OPEC waved a white flag and agreed to specific production levels to bridge a global price war a couple years ago oil and gas producers in the U.S. have emerged as worldwide leaders thanks largely to improved technology and efficiency. Now the big question moving forward is how high can U.S. production go? The U.S. Energy Information Administration (EIA) reported last week that the United States likely" overtook Russia and Saudi Arabia earlier this year to become the worlds 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 isnt necessarily a surprise as EIA announced earlier this year that it expected the U.S. to claim the title of worlds top crude oil producer its important to remember that this feat would have been unimaginable just 10 years ago. Thanks to advancements in horizontal drilling and hydraulic fracturing technology which unleashed previously inaccessible tight oil" formations throughout the country the U.S. saw year-over-year production increase for the first time in 18 years in 2009 and we havent looked back since. With the exception of a brief downturn in 2016 as result of OPECs 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. 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."

The latest EIA forecast projects domestic production will average a record 10.7 million barrels per day (b/d) in 2018 before jumping 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 worlds top crude oil producer for the first time since the early 1970s it has also allowed the U.S. to became a major exporter while  decreasing the nations net imports of crude and petroleum products 70 since 2005.
• Already the worlds top natural gas producer and a net exporter of natural gas some analysts have even projected that the United States will become a net energy exporter by 2022.

Americas 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.