This week’s Declaration of Independents analyzed America’s rebirth of crude oil production – they kicked it off with this amazing fact:
“U.S. crude oil production, after sinking to levels not seen since the mid-1940s, rose more than half a million barrels per day just between 2007 and 2011. That size of increase has not been witnessed in the U.S. for more than forty years.”
Why is this “revival” occurring and why now? The fact is there has been an absolute revolution in oil and natural gas development technology. With new developments that combined horizontal drilling (used for about 30 years by the industry) and hydraulic fracturing (used for more than 60 years) America’s independent producers were able to break through thick shale rock that was previously impermeable to access oil (and natural gas) trapped in shale.
America’s two “All-Star States” of North Dakota and Texas, with their now famous (at least in the energy world) plays of Bakken and Three Forks in North Dakota and Permian Basin and Eagle Ford in Texas are pulling the weight in this increased production. These rich shale plays are the sweet spots from which America’s oil and natural gas companies are creating this reversal in U.S. liquids production.
North Dakota, for its part, has increased its production by an outstanding 240 percent in the past four years alone! The state is experiencing an economic and jobs revival never experienced in the state’s history. Texas, which was experiencing a steady decline in production beginning the 1970s, has completely turned around, as evidenced by graph.
Also, IPAA’s economists noted:
“Even since we published our first article less than a year ago on the reversal in U.S. liquids production through 2010, we’ve had to add another 300,000 barrels per day to American liquid production figures just to bring things up to date with the 2011 annual data. So far in early 2012, the trend, if anything, has accelerated — U.S. liquids production in January and February has already been beating the 2011 average by an additional 660,000 barrels per day.”
Clearly this story is only getting better because America’s oil and natural gas resources “are not a static figure, but can evolve dramatically when technological advances and human ingenuity come into play.”
This is fantastic for the American economy. Increased barrels of oil mean increased jobs for Americans. According to the Bureau of Labor Statistics, the number of Americans now employed in oil and gas development and support activities has grown by more than 100,000 in five years – from 344,000 jobs in mid-2007 to 454,100 in March 2012.
Not only is this fantastic for America’s economy, it’s encouraging for America’s energy security. In fact, U.S. import dependence dropped from 50.4 percent in January 2010 to under 40 percent in February 2012. That’s a 10 percent drop in just two years.
The breakdown of numbers in this reversal is truly extraordinary. I encourage you to read the full analysis.