Bob Tippee
OGJ Editor
The Independent Petroleum Association of America has called attention to a stealthy trend changing the energy landscape: US production of crude oil and gas liquids is increasing.
Not many years ago, US production was thought to have entered a period of perpetual decline. Even fewer years ago, the assumption was that the only producing region able to yield increases was the Outer Continental Shelf.
Events have scuttled those expectations.
IPAA points out that between the first quarter of 2008 and first quarter of 2011, US output of crude oil and gas-plant liquids increased by slightly more than 500,000 b/d.
Last year, total average crude and liquids production was 7.5 million b/d. While that’s still well below historic highs of the 1970s, the gain looks much different from the pessimistic projections of yesteryear. Combined with a sag in demand, it helped lower oil imports between 2008 and 2010 by 1.7 million b/d.
Geography of the production increase also contrasts sharply with former expectations.
Onshore Lower 48 crude production rose by 340,000 b/d between the first quarter of 2008 and same quarter this year. Its trend is upward. Offshore Lower 48 output rose by 260,000 b/d over the period, but the trend is slightly downward.
Onshore production has received new life from shale plays. Offshore production has been slowed by regulatory and permitting brakes applied after the Macondo blowout and spill last year.
Also between first-quarter 2008 and 2011, production of gas-plant liquids increased by 200,000 b/d to more than 2 million b/d.
Further gains are likely—or at least possible—from all three sources as shale plays expand, gas production rises to supply new and expanding markets, and offshore work recovers.
Oil production has entered a new era in the US.
A large question now is whether a hostile political climate, with its persistent threat of preferential taxation of producers and restrictions on essential well-completion methods, will keep the country from enjoying the benefits.
(Online July 22, 2011; author’s e-mail: [email protected])