Oil Production: The U.S. is Looking at Saudi Arabia in the Rearview Mirror

As Americans, we naturally strive to become number one.  Our country has already dominated a handful of categories and achieved recognition for things like the most patents, the most Olympic medals, and of course, the highest cheese production (here’s to you, Wisconsin!).  Now we can be proud of a new achievement: largest oil producer in the world.

Bank of America Corp. reports (via Bloomberg) that the United States has surpassed Russia and Saudi Arabia as the world’s largest producer of oil, and should hold that position for the rest of the year.  The country’s crude oil production has exceeded 11 million barrels per day in the first quarter.

“The U.S. increase in supply is a very meaningful chunk of oil,” states Francisco Blanch, head of commodities research for Bank of America.  “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.”

Thanks, in part, to the process of hydraulic fracturing, Texas and North Dakota shale formations are experiencing a boom in oil extraction.  Despite this growth, the Department of Energy reported that the U.S. still imported an average of 7.5 million barrels of crude per day in April.

Where is it All Coming From?

When it comes to energy independence, the U.S. works together as a whole, but there are two states in particular that are leading the way: Texas and North Dakota.

According to the Energy Information Administration (EIA), Texas is currently producing 36 percent of the nation’s oil. It stated:

Texas production topped 3.0 million bbl/d for the first time since the late 1970s, more than doubling production in the past three years … Gains in Texas crude oil production come primarily from counties that contain unconventional tight oil and shale reservoirs in the Eagle Ford Shale in the Western Gulf Basin, where drilling has increasingly targeted oil-rich areas, and multiple reservoirs within the Permian Basin in West Texas that have seen a significant increase in horizontal, oil-directed drilling.

In addition to the Lone Star state, North Dakota’s oil production has tripled over the last three years.  Combined, these two states are responsible for nearly half of the nation’s oil production.

The Future is Gleaming

The International Energy Agency (IEA) is predicting that U.S. oil production will experience a swell in 2019 to 13.1 million barrels per day, followed by a plateau effect.  The country may even hold its top spot until 2030, according to the agency’s World Energy Outlook report.

“There’s a very strong linkage between oil production growth, economic growth and wage growth across a range of U.S. states,” says Blanch.  He goes on to explain that the country’s annual investment in oil and gas is currently sitting at a record $200 billion, accounting for 20 percent of its entire private fixed-structure spending, which has never happened before.

Citigroup Inc. is estimating that the U.S. has the potential to export one million barrels of crude oil per day by the end of 2014. If this is true, we may be celebrating more than our nation’s independence next July 4th.  Who else wants to see Ernest Moniz sign the Declaration of Energy Independence?

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