EIA: US to approach highest oil production level since 1970

US crude oil production is expected to approach the historical high achieved in 1970 of 9.6 million b/d through 2016, the US Energy Information Administration said in an early release of its Annual Energy Outlook 2014.

However, crude oil production is expected to level off and then slowly decline after 2020 while natural gas production grows steadily, showing a 56% increase from 2012-40 when gas production reaches 37.6 tcf.

EIA projects low gas prices will enable gas-fired electric power generation to overtake generation formerly supplied by coal and nuclear plants in some areas, with gas accounting for 35% of total power generation and coal accounting for 32%.

US exports of gas via pipeline and as LNG are expected to increase to 3.5 tcf in 2029 and remain at that level through 2040, EIA said.

Increased production of oil and gas will enable the US to sharply reduce its use of imported fuels. Net use of imported energy sources, previously 30% in 2005, is expected to decline to 4% of total consumption in 2040 from 16% in 2012.

The jump in crude production will shrink the import share of petroleum and other liquids supply to 25%, EIA said.

“America is in the midst of a game-changing energy revolution,” stated John Felmy, chief economists at the American Petroleum Institute. He added, “This potential has been unlocked by innovations in hydraulic fracturing and horizontal drilling that have made America the world’s top energy producer.”

EIA in March reported US monthly crude oil production was expected to exceed the amount of crude oil imports later in 2013 for the first time since February 1995, largely attributing it to production in shale and other tight rock formations in North Dakota and Texas (OGJ Online, Mar. 20, 2013).

“The EIA report confirms that the United States really is experiencing an energy revolution,” said Daniel Yergin, vice-chairman of IHS.

He said, “Once again, a combination of price, technology, and new areas has pushed away fears of shortage. And it’s not over. Technologies will continue to advance capabilities and widen opportunities. This also underlines even more the question of when and how this revolution goes global.”

Yergin added, “Around the world—from China to the Middle East to Europe to Mexico—this surge from the United States has become a top focus of energy discussion and also a new factor in geopolitics.”

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