WASHINGTON - This week, the U.S. Energy Information Administration (EIA) announced that our nation had reached its highest level of oil and natural gas production since 1998, surpassing 6 million barrels per day (bbl/d) output for the first time in 14 years. Impressive? Absolutely. Surprising? Not really.
As development of America’s onshore shale plays further take hold, safe, responsible, job-creating oil and natural gas production has surged to record levels. In North Dakota alone, April daily production averaged 609,373 barrels—surpassing Alaska in crude oil production and second only to Texas, where the Eagle Ford and Barnett Shales have again revived Texas as the capital of America’s oil and natural gas industry.
And as American oil and natural gas production surges — driven overwhelmingly by independent operators — the geopolitical landscape is changing. As highlighted by the Financial Times, advancement of American energy production has even the world’s largest energy suppliers turning their heads:
“At a seminar in the Opec headquarters in Vienna on Wednesday, the rise in US oil supplies was the shadow that fell over every discussion. Over the past three years, the US has accounted for the entire net increase in global oil output, excluding Opec members and former Soviet republics.”
“Advances in the techniques of horizontal drilling and hydraulic fracturing, first applied to shale gas reserves, are now making it possible to develop US oil in reserves previously commercially unviable.”
“The US increased output of crude oil and other liquid hydrocarbons by 1.1m barrels a day during 2008-11. In that time, other countries that are not Opec members or former Soviet republics lost a net 200,000 barrels per day, according to the BP statistical review, a standard industry reference, published on Wednesday. The rise of US shale oil, along with other sources such as Canada’s tar sands, is raising the prospect that Opec’s share of the global market for crude, and hence its influence over the price, could be undermined.” (Financial Times, 6/14/12)
And as Reuters columnist John Kemp writes, the impact of increased North American production on the global energy dynamic could be dramatic:
“The distribution of unconventional and deepwater oil resources is very different from conventional fields. The majority of unconventional fields lie outside the unstable areas of the Middle East.”
“As a result, most of the increase in global oil output over the next decade is projected to come from the western hemisphere. OPEC’s share of global oil production is set to decline for the first time since the 1980s, diluting the cartel’s influence on prices.”
“Rising North American production may not make the region self-sufficient, but it could still transform the dynamics of the market. ‘If I was an OPEC minister I would be concerned,’ according to Paul Stevens, a senior research fellow at the Chatham House Royal Institute of International Affairs in London.” (Reuters, 6/14/12)
Further, and as world-renowned energy expert, Daniel Yergin, underscores in a recent New York Times column titled “America’s New Energy Reality”:
America’s new story for energy is still unfolding. It includes the continuing development and expansion of renewables and increased energy efficiency, both of which will be essential to our future energy mix. But what is striking is this great revival in oil and gas production in the United States, with wide impacts on jobs, economic development and the competitiveness of American industry. This new reality requires a new way of thinking and talking about America’s improving energy position and how to facilitate this growth in an environmentally sound way — recognizing the considerable benefits this will bring in an era of economic uncertainty.
While North America is just one piece in the global oil and natural gas supply puzzle, increased American energy production — made possible largely by America’s independents — is truly altering the global energy paradigm. It is imperative that leaders in Washington ensure that common sense tax and access polices are in place. It’s truly a matter of economic health and, above all, energy security for America.