U.S. Considers Exporting More Oil for First Time Since ’70s

by Jim Efstathiou Jr. & Jim Snyder, Bloomberg, Jun 18, 2013

The U.S. oil boom is moving Congress closer than it has been in more than three decades to easing the ban on exporting crude imposed after the Arab embargo.

 

Advances such as hydraulic fracturing are leading to record production that may outstrip refinery capacity within 18 months to three years, said Benjamin Salisbury, a senior energy policy analyst at FBR Capital Markets Corp. in Arlington, Virginia. Net petroleum imports now account for about 40 percent of demand, down from 60 percent in 2005, according to the U.S. Energy Information Administration, the Energy Department research unit.

Congress has limited oil exports since the 1973-74 Arab oil embargo triggered shortages that pushed up prices and led to long lines at gas stations. An increase in domestic production last year by a record 766,000 barrels a day [please see my remark below - D.R.] is challenging a notion that Americans need foreign oil, while setting up a debate policy makers may be reluctant to begin.

“Americans are unbelievably politically sensitive to oil and more specifically to gasoline prices,” Salisbury said in an interview. “For politicians to do anything, the pain has to come first. You have to see the rig count fall and then and only then can we have a decision about whether we want to export crude.”  [...]

The U.S. sends about 120,000 barrels of crude a day to Canada under a Commerce Department license. Congress allows exports from Alaska’s Cook Inlet and for consumption in Canada, along with sales determined by the president to be in the national interest.

Exports must expand to sustain the boom that increased U.S. production last year by the most since the first commercial well was drilled in 1859, said Robin West, chairman of the oil consulting firm PFC Energy. Output is putting the nation on pace to surpass Saudi Arabia as the world’s largest producer by 2020, according to Energy Department data. [...]

The oil rush, spurred by technology that makes it cheaper and easier to extract oil from rock formations, has boosted U.S. stockpiles of light, sweet crude, which is less costly to process than high-sulfur grades pumped by Saudi Arabia and Venezuela, making it more profitable for export. Landlocked by the ban and limits on transportation, U.S. light oil trades at a discount to the European blend that sets prices for more than half the globe’s oil.

“If you have an opportunity to export the more expensive product and import the cheaper one, why not do it,” John Felmy, chief economist with the Washington-based American Petroleum Institute, said in a telephone interview. “It’s something that we as a country need to take a look at.”

Still, Americans may balk at the idea of sending oil overseas because they’re concerned it may lead to higher gasoline prices, said David Goldwyn, president of Goldwyn Global Strategies LLC, a Washington-based energy consultant. [Read more]

(According to EIA data, U.S. crude oil production, including lease condensate, increased from 5.652 million barrels a day in 2011 to 6.505 million barrels a day in 2012, i.e., an increase of 853,000 barrels a day in just one year - the largest single-year increase in U.S. oil production ever recorded!---please see here - D.R.)

U.S. Crude Oil Production in First Quarter of 2012 Highest in 14 Years

EIA, Today in Energy, June 8, 2012

[Click on chart to enlarge]

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

Strong growth in U.S. crude oil production since the fourth quarter of 2011 is due mainly to higher output from North Dakota, Texas,and federal leases in the Gulf of Mexico, with total U.S. production during the first quarter of 2012 topping 6 million barrels per day (bbl/d) for the first time in 14 years.

After remaining steady between 5.5 million and 5.6 million bbl/d during each of the first three quarters of 2011, EIA estimates that U.S. average quarterly oil production grew to over 5.9 million bbl/d during the fourth quarter and then surpassed 6 million bbl/d during the first quarter of 2012, according to the latest output estimates from EIA's May Petroleum Supply Monthly report (see chart below). The last time U.S. quarterly oil production was above 6 million bbl/d was during October-December 1998.

[Click on chart to enlarge]

Source: U.S. Energy Information Administration, Petroleum Supply Monthly

The roughly 6% growth in U.S. oil production from October 2011 through March 2012 is largely the result of increases in oil output in North Dakota, Texas, and the Gulf of Mexico. After passing California in December 2011 to become the third largest oil producing state, North Dakota then jumped ahead of Alaska in March 2012 as the state with the second largest oil output [Please see remarks below -- D.R.]. Texas remains far ahead in the number one production spot. [Full story]

(Please see my post "North Dakota Tops Alaska in Oil Production, Trailing Only Texas," including my remarks. North Dakota produced an average of 609,000 barrels of crude oil every day in April 2012, another record, and up from 577,000 barrels a day in March 2012, according to EIA. Also, please see "EIA Expects Higher U.S. Crude Production," Aaron and David Rachovich, "U.S. Crude Oil Production, 1970-2011 -- EIA" and "Texas Crude Oil Production, Jan 2007-Jul 2012" -- D.R.)     

North Dakota Tops Alaska in Oil Production, Trailing Only Texas

by Stephen J. Lee, Inforum, Grand Forks, May 14, 2012
North Dakota passed Alaska in March to become the second-leading state in crude oil production, trailing only Texas, according to officials from Alaska and North Dakota.

It’s been a dramatic rise for a state that was behind seven other states in 2006 in terms of oil production.

North Dakota produced an average of 575,490 barrels of crude oil every day in March, another record, and up from 558,255 barrels a day in February, according to Lynn Helms, director of the state’s Department of Mineral Resources. The crude is coming from a record 6,636 wells, up from the previous record of 6,450 set in February.

The number of rigs drilling in the state was at 208 on Monday, about where it’s been for eight months, including a record 212 drilling for a day or two earlier this month.

North Dakota’s new record output of crude surpassed the steadily declining output of Alaska, which saw its production fall to 567,481 barrels per day in March, down nearly 15,000 barrels from February’s daily average, said Stephen McMains of the state’s Oil and Gas Conservation Commission on Monday.

Meanwhile, Texas’ production has been rising by 12 [11? -- D.R.] percent since September, to 1.72 million barrels per day in February, the latest figures available from the U.S. Energy Information Administration, which tracks state and federal crude oil production. Meg Coleman, a geologist with the EIA, said preliminary figures make it appear Texas’ production increased in March [Texas produced 1.755 million barrels per day in March 2012, according to preliminary EIA figures. -- D.R. Please see also "Texas Crude Oil Production, Jan 2007-Jul 2012" -- D.R.].

Fueled by the Bakken [shale play -- D.R.] boom in the Williston Basin in the western part of the state, North Dakota’s oil production has nearly quadrupled [sic] since March 2007, when it averaged 118,103 barrels per day.

In December [2011 -- D.R.], North Dakota’s crude production eclipsed California for the third ranking; California produced 540,000 barrels a day in February and it will remain about the same when March figures are released later this month, said Gordon Schremp of the state’s energy commission [California produced 538,000 barrels a day in March 2012, according to EIA -- D.R.].

The top four producing states – Texas, North Dakota, Alaska and California – accounted for 55 percent of the nation’s February total crude output of 6.144 million barrels a day, which also includes about 1.4 million barrels per day produced from federal off-shore wells, according to EIA. [...]

Alaska has seen decreasing production for decades, since pumping out more than 2 million barrels a day in the 1970s [sic; in 1987-1988 -- D.R.]. [Read more]

(Also, please see "Five States Accounted for about 56% of Total U.S. Crude Oil Production in 2011," "North Dakota Surpasses OPEC Member Ecuador in Oil Production," "United States: Top 8 Crude Oil Producing States, 2006-Feb.2011," and "North Dakota Oil Tax Revenue Breaks $100M Mark in March as Industry Booms." North Dakota's crude oil production increased sharply in the late 1970s and peaked in 1984 at 144,000 barrels per day. Production declined through the late 1980s and early 1990s. After a small rise in 1995-97, production slowed again. Crude production dropped to 81,000 barrels per day in 2003. But since 2004, it has grown constantly to reach 310,000 barrels per day in 2010, surpassing the previous peak of 218,000 barrels per day in 2009. In 2011, North Dakota's crude output grew further to reach 419,000 barrels per day. Significantly, on a monthly basis, North Dakota's crude oil production rose from 138,000 barrels per day in January 2008, to 357,000 barrels per day in November 2010, to 510,000 barrels per day in November 2011 and, as mentioned, to 575,000 in March 2012. Update: Please watch an interview with Lynn Helms, here Videos -- D.R.)

Five States Accounted for about 56% of Total U.S. Crude Oil Production in 2011

EIA, Today in Energy, Mar 14, 2012

[Click on chart to enlarge]

Source: U.S. Energy Information Administration, Petroleum Supply Monthly.
Note: Production data includes crude oil and lease condensate. Download CSV Data

Combined oil production (crude oil and lease condensate) from the top five U.S. oil-producing states increased during 2011 (see chart above). The biggest gains were in North Dakota and Texas, due in large part to increased horizontal drilling and hydraulic fracturing activity. Texas, Alaska, California, North Dakota, and Oklahoma accounted for about 56% of U.S. oil production last year, according to EIA's February Petroleum Supply Monthly report.

Highlights from the top oil-producing states in 2011 included:

• Texas. The Eagle Ford shale formation in south Texas contributed to gains in the state's oil production, which averaged 1,425 thousand barrels per day (bbl/d), the highest level since 1997. [Update: for the Eagle Ford production, please my post/remarks here -- D.R.]   
• Alaska. Oil production fell for the ninth year in row, averaging 563 thousand bbl/d.
• California. Oil production averaged 535 thousand bbl/d, the lowest level in at least three decades.
• North Dakota. Preliminary data indicate increasing oil production from the Bakken formation pushed North Dakota ahead of California in December as the third biggest oil-producing state. North Dakota's oil production averaged 535 thousand bbl/d in December 2011 and 419 thousand bbl/d for the year.
• Oklahoma. Oil production averaged 204 thousand bbl/d during 2011, topping 200 thousand bbl/d for the first time since 1998.

[Click on chart to enlarge]

Source: U.S. Energy Information Administration, Petroleum Supply Monthly.
Note: Production data includes crude oil and lease condensate. Download CSV Data [Full story]

(Also, please see "United States: Top 8 Crude Oil Producing States, 2006-Feb.2011." North Dakota has overtaken California as the third-largest oil-producing state in the nation. Production totals released [...] by both states show North Dakota pumped 16.9 million barrels of oil in January [2012], compared with California's 15.8 million barrels. North Dakota had a daily average of 546,000 barrels, besting California by more than 36,000 barrels---please see newsok.com Mar 8, 2012. Update: Crude oil output in North Dakota reached a record high in February [2012] as a mild winter boosted activity in the Bakken shale prospect, bringing the state closer to overtaking Alaska as the second-largest oil producer in the country. North Dakota crude oil production rose by about 12,000 barrels per day (bpd), to more than 558,000 bpd, data from the state regulator showed [...], affirming the state's position as the third-largest producing state in the union after Texas and Alaska---please see Reuters, Apr 11, 2012 Update 2: North Dakota passed Alaska in March 2012 to become the second-leading state in crude oil production, trailing only Texas---please see my post "North Dakota Tops Alaska in Oil Production, Trailing Only Texas."-- D.R.)

EIA Expects Higher U.S. Crude Production

UPI, Mar 7, 2012

Crude oil production in the United States is expected to surge to 5.83 million barrels per day in 2012, an increase from last year, the EIA declared.

The U.S. Energy Department's Energy Information Administration said in its March energy outlook that crude oil production should increase from 5.6 million barrels per day in 2011 [please see remarks below -- D.R.] to 5.83 million bpd in 2012 [please see remarks below -- D.R.].

Critics accuse U.S. President Barack Obama of blocking domestic energy production. The White House says oil production is the highest it's been in years, though Republican leaders say that's because of policies enacted by the previous administration. [Read more]

(U.S. crude oil production increased by an estimated 120 thousand bbl/d to 5.60 million bbl/d in 2011. A 390-thousand bbl/d increase in lower-48 onshore production in 2011 was partly offset by a 40-thousand bbl/d decline in Alaska and a 230-thousand bbl/d decline in output in the Federal Gulf of Mexico/GOM. Forecast U.S. total crude oil production increases by 230 thousand bbl/d in 2012 and by a further 90 thousand bbl/d in 2013. Continued increases in lower-48 onshore crude oil production of 340 thousand bbl/d in 2012 overshadow declines averaging about 20 thousand bbl/d in Alaskan output and a 90-thousand bbl/d decrease in GOM production. The rise in production is driven by increased oil-directed drilling activity, particularly in onshore shale formations (my emphasis -- D.R.). The number of onshore oil-directed drilling rigs reported by Baker Hughes increased from 777 at the beginning of 2011 to 1,293 on March 2, 2012---please see EIA's Short-Term Energy Outlook, March 6, 2012. Also, please see Aaron and David Rachovich, "U.S. Crude Oil Production, 1970-2010 -- EIA". -- D.R.)

North Dakota Surpasses OPEC Member Ecuador in Oil Production

By Joe Carroll, Bloomberg, Jan 10, 2012
North Dakota oil production surged 42 percent to 510,000 barrels a day in November, exceeding the output of OPEC member Ecuador, as energy explorers accelerated drilling in the Bakken Shale formation.

The state’s daily crude output topped a half-million barrels for the first time during the month, North Dakota’s Oil and Gas Division said today in a statement. North Dakota’s 6,300 wells produced enough oil to displace imports from foreign suppliers such as Iraq or Colombia, Lynn Helms, division director, said in the release [Helms added that a half a million barrels a day represents about 10% of U.S. production. Please see a press release from ND Oil and Gas Division, Jan 10, 2012 -- D.R.].

Oil producers including EOG Resources Inc. (EOG) and Continental Resources Inc (CLR). have spurred a five-fold increase in North Dakota’s oil output by using intensive drilling practices to tap the Bakken, a geologic formation that stretches from southern Alberta to the northern U.S. Great Plains. It’s estimated to hold as much as 4.3 billion barrels of technically recoverable oil in North Dakota and Montana, according to a 2008 report by the U.S. Geological Survey.

 “This is big news for the state and the country,” Helms said. “Oil production in the state has increased anywhere from 8,000 to 40,000 barrels a day every month since June.”

Production will continue to increase as drillers hone their techniques, Andrew Steinhubl, co-leader of consulting firm Bain& Co.’s North American oil and gas practice, said in a Jan. 6 interview from Houston.

Rising Crude Production

In the Bakken formation alone, crude production rose 56 percent in November to 443,425 barrels a day from a year earlier, state figures showed. Bakken oil accounted for 87 percent of the state’s total November output.

Continental, the Enid, Oklahoma-based oil company controlled by billionaire Harold Hamm, is the largest leaseholder in the Bakken shale region, with 901,000 acres, based on third-quarter 2011 data compiled by Bloomberg Industries. Hess Corp. of New York and Denver-based Whiting Petroleum Corp. are second and third with 900,000 acres and 680,000 acres, respectively.

Bakken crude is a low-sulfur variety preferred by refiners not equipped to handle heavier, more corrosive types of oil. Bakken crude rose 1.5 percent to $97.97 a barrel today at the Clearbrook, Minnesota, hub, according to data compiled by Bloomberg. The price has increased 15 percent in the past year.

Ecuador, with 500,000 barrels of daily output in November, was the smallest member of the Organization of Petroleum Exporting Countries, according to data from the International Energy Agency in Paris (Also, please see my post "World's Top 23 Crude Oil Producers, November 2011/Notes" -- D.R.).

To contact the reporter on this story:Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editor responsible for this story: Tina Davis at tinadavis@bloomberg.net  (Full story)

(North Dakota produced a record 152.9 million barrels of crude in 2011, up more than 35 percent from the previous record of 113 million set a year earlier. Daily production was up to a record 534,000 barrels per day in December 2011---please see Grand Forks Herald, Feb 8, 2012. For the North Dakota oil ranking, please see Aaron and David Rachovich, "United States: Top 8 Crude Oil Producing States, 2006-Feb.2011." Update: North Dakota has overtaken California as the third-largest oil-producing state in the nation---please see my post "Five States Accounted for about 56% of Total U.S. Crude Oil Production in 2011." Update 2: Crude oil output in North Dakota reached a record high in February [2012] as a mild winter boosted activity in the Bakken shale prospect, bringing the state closer to overtaking Alaska as the second-largest oil producer in the country. North Dakota crude oil production rose by about 12,000 barrels per day (bpd), to more than 558,000 bpd, data from the state regulator showed [...], affirming the state's position as the third-largest producing state in the union after Texas and Alaska---please see Reuters, Apr 11, 2012. Update 3: North Dakota passed Alaska in March 2012 to become the second-leading state in crude oil production, trailing only Texas---please see my post "North Dakota Tops Alaska in Oil Production, Trailing Only Texas." Operators increased North Dakota's Bakken production from less than 3,000 barrels per day in 2005 to over 230,000 barrels per day in 2010. The Bakken's share of total North Dakota oil production rose from about 3 percent to about 75 percent over the same period. North Dakota produced an average of 307,000 barrels of crude oil per day in 2010 and comprised about 5.6 percent of the nation's total crude production. For North Dakota's oil production in historical perspective, please see my post/remarks here -- D.R.)

United States: Top 8 Crude Oil Producing States, 2006-Feb.2011

by Aaron and David Rachovich

Production of Crude Oil (Thousand Barrels Per Day), 2006-Feb.2011  

Rank	State	Feb 2011	Jan 2011	Full Year 2010	Full Year 2009	Full Year 2008	Full Year 2007	Full Year 2006
1.	Texas	1,224	1,250	1,141	1,106	1,087	1,087	1,088
2.	Alaska	611	464	599	645	683	722	741
3.	California	555	550	558	567	586	594	612
4.	North Dakota	360	341	307	218	172	123	109
5.	Oklahoma	188	197	186	184	175	167	172
6.	Louisiana	187	185	182	189	199	210	202
7.	New Mexico	178	185	171	168	162	161	164
8.	Wyoming	143	146	142	141	145	148	145
Top 8 States		3,446	3,318	3,286	3,218	3,209	3,212	3,233
U.S. Total		5,612	5,483	5,512	5,361	4,950	5,064	5,102

Source: U.S. Energy Information Administration (EIA), June 29, 2011, here and here.

(In 2010, almost 60% of U.S. crude oil production came from eight States: Texas - 20.7%; Alaska - 10.9%; California - 10.1%; North Dakota - 5.6%; Oklahoma - 3.4%; Louisiana - 3.3%; New Mexico - 3.1%; and Wyoming - 2.6%. About 30% of U.S. crude oil was produced from wells located offshore in federally administered waters of the Gulf of Mexico. Update: please see my post "Five States Accounted for about 56% of Total U.S. Crude Oil Production in 2011." Update 2: North Dakota passed Alaska in March 2012 to become the second-leading state in crude oil production, trailing only Texas---please see my post "North Dakota Tops Alaska in Oil Production, Trailing Only Texas." Also, please see our post "U.S. Crude Oil Production, 1970-2010." -- D.R.)