By Etuka Sunday with agency report
US has joined the league of top three oil producers in the world, as its liquid petroleum is surpassing its previous peak, reached in 1970, in the latest landmark for the country’s shale oil boom.
Petroleum production, including crude oil and related liquids, known as condensate, and natural gas liquids (NGLs) such as ethane, was 11.27m barrels per day in April, almost equalling the peak of 11.3m b/d reached as an average for 1970. Recent growth rates suggest that it has now exceeded that figure.
The composition of US production today is not the same as in the early 1970s, in that it has a higher proportion of NGLs, which have a lower energy content and value than crude oil. Crude production of 8.3m b/d in April was still well short of its record high of 10m b/d in November 1970.
Even so, the rebound in US output has refuted claims that it was in irreversible long-term decline. Forecasts from the US Energy Information Administration suggest that crude production will also come close to its 1970 peak in the next few years.
The US is already the world’s largest producer of oil and gas, taken together, and is one of the top three in terms of oil alone, alongside Russia and Saudi Arabia.
The US boom is in sharp contrast to oil production elsewhere in the world, which is constrained by decline in mature areas such as the North Sea and political and security issues in countries such as Iraq and Syria. UK oil production has continued a steep decline in recent years, falling by more than two-thirds from its high point of just under 3m b/d in 1999.
The turmoil in northern Iraq, affecting some of the country’s principal oil-producing areas, sent the price of Brent crude up 4 per cent last week, its biggest one-week rise since July last year. The price of US benchmark West Texas Intermediate crude has also risen, showing how, in spite of being an increasingly important producer, the US is not immune to the effects of disruption in world markets.
The rise in world oil prices is, however, being curbed by US production, which over 2005-13 accounted for almost all of the increase in global supply.
The US oil industry has been transformed by the innovations of smaller independent companies that pioneered the development of shale oil in the Bakken formation of North Dakota and the Eagle Ford in south Texas.
Advances in the techniques of hydraulic fracturing and horizontal drilling have made it possible to extract previously inaccessible resources, and high oil prices made it commercially attractive.