IPAA Ranks Top 10 U.S. Oil & Natural Gas Records

The past few years has been an incredible time for America’s independent producers and the entire upstream oil and natural gas industry. The shale revolution, spurred by horizontal drilling and hydraulic fracturing, has propelled the United States to be one of the biggest energy plays in the world. Take a look at some of the most amazing industry records, compiled by the Independent Petroleum Association of America’s economic team, Fred Lawrence and Ron Planting.

 Domestic Liquids Production and Net Imports

U.S. Records in 2012

  1. U.S. crude oil production rose by the largest volume ever in its history, nearly 850,000 barrels per day, or 14.9 percent. Natural gas liquids production rose by over 180,000 barrels per day, or 8.3 percent. For the first time ever, the combined increase for all liquids exceeded 1 million barrels per day, a 13.1 percent rise. U.S. crude oil production averaged 6.5 million barrels per day, and with natural gas liquids output, total liquids output was the highest since 1991 at 8.9 million barrels per day. (Energy Information Administration)
  2. U.S. output of natural gas liquids reached an all-time high. Natural gas liquids output averaged 2.4 million barrels per day, up nearly 40 percent from 2005’s 1.7 million barrels per day. (EIA)
  3. U.S. marketed production of natural gas set another all-time record, at 25.3 trillion cubic feet. That was up 34 percent from 2005. (EIA)
    Domestic Natural Gas Production and Net Imports
  4. In just a few years, the U.S. has greatly reduced its reliance on oil imports.  In 2005, 60 percent of U.S. oil consumption was supplied by net imports; in 2012 that share dropped to just under 40 percent, the result of increased U.S. production and reduced U.S. consumption. ”In 2005, the US and EU imported similar amounts; in 2012, US net imports were nearly one-third below those of the European Union.” (BP)
  5. In just a few years, the U.S. has favorably reversed its trade balance on refined products.   In 2005, the U.S. was a net importer of nearly 2.5 million barrels per day of products. In 2012, it was a net exporter of over 1 million barrels per day of products. Gross exports of products exceeded 3 million barrels per day in 2012 for the first time ever. (Energy Information Administration)
  6. U.S. proved oil reserves were 26 percent higher than a year ago. “Overall, proved oil reserves were 26 percent higher than a decade ago, and 60 percent higher than in 1992 – despite the production of nearly 600 billion barrels of oil over the past two decades. Proved gas reserves are up 21percent over the past decade and 59 percent compared to 1992.” (BP)
  7. The share of natural gas in U.S. energy consumption has grown faster than for any other energy source in the past two years, while coal’s share has declined the most.  U.S. natural gas consumption rose to a record 25.5 trillion cubic feet in 2012, up 5.9 percent from 2010. Compared with 2005, natural gas’s share of total energy has risen from 23.7 percent to 27.3 percent, while coal’s share has fallen from 24.0 percent to 18.3 percent, largely because of displacement of coal by natural gas for electricity generation. (EIA)
    Change in Electric Power Inputs Since 2005
  8. U.S. consumption of natural gas reached an all-time high of 25.5 trillion cubic feet, while consumption of natural gas liquids was the highest since 2000. Natural gas consumption was up 4.6 percent from 2011’s level. NGL consumption rose close to 1 percent to 2.32 million barrels per day, 4.5 percent below the all-time high of 2.43 million barrels per day reached in 2000.
  9. U.S. exports of natural gas reached an all-time high of 1.62 trillion cubic feet, up more than 7 percent from 2011 and double the level of five years earlier. More than 98 percent of these exports were by pipeline to Canada and Mexico, with the remainder exported as LNG to other parts of the world. With declining imports and rising exports, U.S. net imports of natural gas sank to 1.52 trillion cubic feet, the lowest since 1990.
  10. Increased demand for U.S. natural gas (a less carbon-intensive fuel for power generation) helped bring about the lowest energy-related carbon dioxide (CO2) emissions since 1994. With the exception of 2010, emissions have declined every year since 2007. (EIA)

World Records in 2012

  • The U.S. had the largest increases for both oil and natural gas production of any country in the world. “Driven by tight oil growth, US production has  expanded by 2 Mb/d over the last five years,  the largest increase in the world and twice  that of Iraq (1 Mb/d), which accounted for the  second largest increment.” (BP)
    Top 10 Oil Producers BOTH CHARTS
  • The U.S. is the largest producer of natural gas in the world, and third largest oil producer. U.S. oil production is exceeded only by Saudi Arabia and by the Russian Federation.  The U.S. has become the largest producer of natural gas in the world when it overtook the Russian Federation in 2009. (BP)

Top 10 Natural Gas Producers BOTH CHARTS

  • The Non-OECD accounted for all the net growth in world energy consumption.  China and India accounted for 90 percent of the net increase in world energy consumption. “Over the last ten years, global energy consumption increased by 30%, almost all of which outside the OECD. Then, over the last 2 five years, OECD consumption fell – four out of these last five years, to be precise, and in three of these four despite positive GDP growth.” (BP)
  • Energy consumption for the OECD declined as it has for four of the past five years. “…the OECD is now back to where it was in 2002 – despite cumulative GDP growth of 26% over that same period.” (BP)
  • Organization of the Petroleum Exporting Countries controlled 72.6 percent of the world’s proved oil reserves (BP). North America (U.S., Canada, and Mexico) accounted for 48.2 percent of non-OPEC proved reserves.

 

International Perspectives:

  • The IEA forecasts a reduction in the need for OPEC oil in 2014, even with rising world demand, as U.S. and Canadian output rise 1 million barrels per day. Smaller production increases for some other non-OPEC producing countries are also forecast. (IEA July release). OPEC itself has also forecast (July 2013) a decline in 2014 for the need for OPEC oil with an increase in non-OPEC supplies of 1.1 million barrels per day offsetting a OPEC production decline of 0.3 million barrels per day. (IEA, OPEC)
  • It is interesting to note that in their World Oil Outlook, OPEC did not truly recognize the U.S. unconventional revolution until the 2010 issue – “whether shale gas is a ‘game-changer’ remains unclear. However, its potential is undisputed.” In earlier editions, they focused primarily on the impact of U.S. fuel efficiency standards and biofuels and even in the 2011 edition they viewed the Caspian, Brazil and Canada as the main drivers of non-OPEC supply growth. However, in the 2012 edition, they did note that “shale gas has large potential but mainly in the U.S. for now” and noted that “replicating U.S. success internationally requires key challenges including water shortages, lack of infrastructure, higher population densities, shortage of skilled labor and the NIMBY effect.” (OPEC World Oil Outlook)
  • The IEA forecasts world natural gas consumption will rise 17 percent between 2012 and 2018, aided by the revolution in shale gas production.  It forecasts that the U.S. alone will account for over one-fifth of the worldwide increase in gas production, “benefiting from technological developments and cost-efficient field services.”  The IEA also noted that the U.S. could become “the world’s biggest producer in a decade” and “the exploitation of ‘unconventional’ fossil fuels represented the biggest redrawing of the energy map for decades.” (IEA)
  • Russia’s view on the U.S. shale revolution has transformed from denial to skepticism. Putin originally denounced shale for ‘costing too much and ruining the environment’ while the head of Gazprom described the shale revolution as a ‘myth’ and ‘a bubble that will burst soon.’ Now, with more numbers to back up the sustainability of shale and tight oil, Putin admits that there may indeed be a ‘real shale revolution’ after all and he is monitoring the situation carefully and has urged Russia’s energy companies to ‘rise to the challenge’ of shale. (The Economist) Given the dependence of Europe on Russian natural gas (and oil) and the rising sensitivities to energy security from Poland to the U.K., the Russian interpretation of the U.S. unconventional revolution and export policies bears further study. Meanwhile, EIA has put Russia at the top of its list of countries with technically recoverable shale oil resources.