Bloomberg – by Grant SmithThe 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 Exchangeremain 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, whileNigeria’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.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net James Herron, Randall Hackley
Yet I am still paying almost 4 buck a gallon for diesel.
I know, really.
varies between $3.99 & $4.25 here (went up to $4.25 for the 4th) in Boise Idaho
And other modern day American fables include 6 percent unemployment, South American children arrive at our border by walking 2500 miles, Obama is qualified to be President , The dollar and stock market are really worth something, houses are worth 500k with a 10k tax bill each year LOL. Police officers are justified in making 100 k a year plus as well as teachers and public sector employees ie 10k tax bills a year to pay them. When this cluster**ck country implodes its going to be unreal.
No, it is not a ‘modern day fable’.
Our petroleum, like the rest of our resources, is being stolen at a rate we cannot even comprehend, as we pay four f#@king dollars a gallon for gas.
Wow im honored to get a response from the big guy that runs the site , I only meant that the fable is that we are now energy rich and independent. Its only the fracking and techniques that are destroying fresh water supplies and aquifers which are giving a momentary rise in oil production . I anticipate a rise in cancer and more destruction of ranchland and farms from this oil bonanza which will peter out rather quickly. And the rise in prices are mainly due to the destruction of the value of the dollar through inflation.
Horseshit! We have huge untapped reserves. The fracking is being implemented because they cannot take our reserves until they break us.
That dollar you speak of is the petroleum dollar.
The fact is there is plenty of petroleum owned by we the people and we should be paying about seven cents a gallon for gas. It is just that these international communists have thrown our resources into the international economy where we have to compete with every other son of a bitch around this world for our own resources.
Though it is going to stop soon, as we will either stop it or lose the whole f#@king country.
We American nationals own everything here. No one has taken possession as we still hold our firearms.
As for the oil reserves, they are in the Alaskan wilderness, South Dakota, and North Dakota, and they are untapped.
Only question is, what are you doing on this site, you defeatist/troll/agent? Take your mealy mouth elsewhere.
Bye.
Yep, we have more Light Sweet Crude than 70+% of the entire planet could ever need.
An Uncle of mine who once worked in the Alaskan oil fields was telling me they have more just up there alone than in the entire middle east, yet “someone” ordered those wells capped and re-listed as “Dry” when they in fact have very high artesian wellhead pressures. (80Kpsi+)
Another thing he told me about was that only a “Tiny” fraction of a Percentage of the oil that is pumped & refined here is “Allowed” to be sold/used here per political & EPA BS restricting it.
yes, I’m sure we’re producing it, but who’s getting it?
I think this article was written to prepare Americans for much more expensive energy prices, while our resource wealth is drained off and sent to the chinks.
We’ve always had a 100 year supply underground, but the strategy was to drain foreign resources first (thereby making our oil much more valuable).
Now they’re grabbing everything they can before running this country down the tubes, so we’re hearing from Bloomberg that this is why our energy prices aren’t higher than they already are.
BS. They’re stealing our oil, selling it to the chinks, and our gas prices will double.
Who gives a damn!
How does this help the American National? Sure there are more jobs, but only a fraction compared to what we had in 1999. Only the scum bag with the 900 foot yacht wins here. Blatant propaganda bullshit at it’s finest.