API urges speedy approval of U.S. LNG exports

by Zachary Cikanek, API, Nov 15, 2013

API Director of Upstream and Industry Operations Erik Milito welcomed today’s authorization by the Department of Energy for exports from the Quintana Island, Texas liquefied natural gas (LNG) facility and urged the agency to quickly process the remaining 21 applications:

“LNG exports will significantly reduce our trade deficit, grow the economy, and support thousands of U.S. jobs. The DOE has every reason to quickly approve these applications, and we’re pleased that they seem to be moving ahead. The shale revolution -- sparked by U.S. innovations in hydraulic fracturing -- has positioned America to play a leading role in the global energy trade, and we must work fast to secure a competitive position in the international market. We continue to urge Energy Secretary Moniz to oversee speedy review and approval of the remaining U.S. LNG export permit applications.”
[Read more]

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. [Weekly Crude] Oil Production Increases to Highest Since December 1994

By Asjylyn Loder, Bloomberg, Nov 7, 2012
U.S. [crude -- D.R.] oil production rose to the highest in almost 18 years as a shale drilling boom cut reliance on foreign fuel and nudged the country closer to energy independence.

Output swelled by 8,000 barrels to 6.68 million barrels a day in the week ended Nov. 2, the Energy Department reported today. It was the most since [the week of -- D.R.] Dec. 23, 1994 [, when crude output topped 6.7 million b/d---please see Argus. Also, please see EIA data on weekly U.S. field production of crude oil, Jan 7, 1983 - Nov 2, 2012. -- D.R.]. Improvements in horizontal drilling and hydraulic fracturing, or fracking, have unlocked fuel trapped in deep underground rock formations in states such as North Dakota, Texas and Oklahoma. [The volume of crude flowing from US onshore and offshore wells is up more than 14 percent, or 830,000 b/d, over the same time last year, mostly due to an unconventional oil boom in several shale formations, including the Eagle Ford of south Texas, the Permian basin in west Texas and North Dakota's Bakken---please see Argus -- D.R.]. 

The U.S. met 83% of its energy needs in first six months of 2012, on track to be the highest annual level since 1991, according to department data compiled by Bloomberg. Production advanced 31 percent this year in North Dakota, 19 percent in Texas and 11 percent in Oklahoma, department records show. Crude imports have declined 11 percent this year.

“Every added barrel we make here is another barrel we don’t need from somewhere else,” said Kyle Cooper, director of commodities research at IAF Advisors, a Houston consulting firm.“U.S. production could reach 9 million to 10 million barrels per day in another five to 10 years.” [Read Full]

(According to EIA, U.S. crude oil production, including lease condensate, averaged almost 6.5 million barrels per day in September 2012, i.e., 6,468,000 barrels per day -- D.R., the highest volume in nearly 15 years. EIA maintains the last time the United States produced 6.5 million barrels per day or more of crude oil was in January 1998, sic >> my remark -- was in April 1998 when it produced 6,483,000 barrels per day -- D.R. Since September 2011, U.S. production has increased by more than 900,000 barrels per day. Most of that increase is due to production from oil-bearing rocks with very low permeability through the use of horizontal drilling combined with hydraulic fracturing. The states with the largest increases are Texas and North Dakota. From September 2011 to September 2012, Texas production increased by more than 500,000 barrels per day, and North Dakota production increased by more than 250,000 barrels per day. Texas's increase in production is largely from the Eagle Ford formation in South Texas and the Permian Basin in West Texas. North Dakota's increase in oil production comes from the Bakken formation in the Williston Basin. Increased production from smaller-volume producing states, such as Oklahoma, New Mexico, Wyoming, Colorado, and Utah, is also contributing to the rise in domestic crude oil production---please see EIA,"U.S. Monthly Crude Oil Production Reaches Highest Level since 1998," Today in Energy, Dec 4, 2012. Wood Mackenzie Ltd. calculates oil and gas companies will spend $28 billion in the South Texas Eagle Ford play during 2013---please see OGJ, Dec 6, 2012.
The U.S. is set to become the biggest oil producer by 2020, according to the International Energy Agency/IEA. Within 10 years, U.S. oil imports will drop to about 4 million barrels a day from a current average of 10 million, thanks to new oil production in the U.S. and stricter fuel-efficiency standards for cars and trucks, IEA Chief Economist Fatih Birol said at a London press conference on Nov. 12, 2012. The U.S. will pump 11.1 million barrels of oil a day in 2020 and 10.9 million in 2025, according to the IEA. Those figures are 500,000 barrels and 100,000 barrels higher, respectively, than its forecasts for Saudi Arabia for those years. The U.S. is not destined to become the next Saudi Arabia, though.[...] The U.S. will be the world’s top producer for about five years, starting in 2020. Sometime after that, U.S. production will slip behind Saudi Arabia’s again, according to the IEA’s Birol---please see this interesting forecast: "Is It Time for the U.S. to Join OPEC?," BloombergBusinessweek, Nov 15, 2012. Also, please see our article "U.S. Crude Oil Production, 1970-2011" and my posts: "Texas Crude Oil Production, Jan 2007-Jul 2012," "U.S. Crude Oil Production in First Quarter of 2012 Highest in 14 Years," "North Dakota Tops Alaska in Oil Production, Trailing Only Texas," "Five States Accounted for about 56% of Total U.S. Crude Oil Production in 2011." -- D.R.)

Texas Crude Oil Production, Jan 2007-Jul 2012

by David Rachovich

 

 

Texas Field Production of Crude Oil, Jan 2007-Jul 2012 (thousand barrels per day)

 

 

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2007	1,057	1,078	1,080	1,082	1,072	1,058	1,058	1,063	1,069	1,071	1,083	1,087
2008	1,094	1,104	1,114	1,113	1,109	1,097	1,110	1,110	1,055	1,125	1,141	1,133
2009	1,132	1,125	1,118	1,110	1,088	1,071	1,062	1,066	1,080	1,080	1,100	1,089
2010	1,098	1,120	1,136	1,136	1,144	1,142	1,155	1,169	1,193	1,219	1,251	1,284
2011	1,291	1,234	1,342	1,354	1,401	1,407	1,438	1,485	1,531	1,590	1,650	1,681
2012	1,711	1,764	1,787	1,847	1,864	1,900	1,925	2,001

Source: U.S. Energy Information Administration (EIA), Sep 27, 2012. Update: EIA, Oct 30, 2012 for Aug 2012

(Texas crude oil production increased until 1972, when it peaked at 3.452 million barrels a day. Afterward, production declined rapidly, and in the early 2000s Texas crude oil output has fallen to less than one-third of its 1972 peak. Growing production from shale formations is helping fuel a renaissance in Texas crude. Texas produced 1.9 million barrels a day in June 2012, the highest monthly level since April 1991. Oil production in the Eagle Ford shale formation of southern Texas reached 310,370 barrels a day in July 2012, according to preliminary data from the Texas Railroad Commission. That’s up from a 120,532 barrels a day in July 2011---please see Bloomberg, Sept 21, 2012 -- 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.)