Tuesday, January 02, 2018

U.S. Oil Production Booms as New Year Begins

U.S. crude oil production is flirting with record highs heading into the new year, thanks to the technological nimbleness of shale oil drillers . "It's a total turnaround from where we were in the '70s," said Frank Verrastro, senior vice president at the Center for Strategic and International Studies. Shale oil drills can now plunge deep into the earth, pivot and tunnel sideways for miles until they hit an oil pocket, Verrastro said. The United States is so awash in oil that petroleum-rich Saudi Arabia's state-owned oil and natural gas company is reportedly interested in investing in the fertile Texas Permian Basin shale oil region, according to a report last month. U.S. oil production averaged around 9.6 million barrels per day in 2017. The highest U.S. production based on monthly government data is above 10 million barrels per day, which dates back to 1970.

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The resilience of U.S. oil producers has come as the price of crude rose above $60 per barrel on world markets. Many shale drillers can start and stop on a dime depending on the world oil price. The sweet spot for shale profit is in the neighborhood of $55 to $60 per barrel.

U.S. average daily oil production of 10 million barrels a day wasn't thought possible a few years ago. Daily U.S. output plummeted to 3.8 million barrels per day in September 2005 and again in September 2008.

That's nowhere near the almost 20 million barrels per day in petroleum products that the United States consumes. But the volume of domestic production allows the United States to tamp down oil prices by maintaining supply.

The increased production "doesn't make us independent, but now we have a lot of low-cost natural gas and low-cost oil. And we have become exporters of natural gas," Verrastro said. "It's a rosy scenario. At least for now."

Comments

Remember the Usual Suspects circle flapping a couple of years ago screaming about "Peak Oil?":

That is a far cry from the days when U.S. production was on what was thought to be an irreversible downward path.

"For years and years, we thought we were running out of oil," Verrastro said. "It took $120 for a barrel of oil to make people experiment with technology, and that has been unbelievably successful. We are the largest oil and gas producer in the world."

Funny how that talking point has quietly dropped out of the Progressive narrative.

#1 | Posted by Rightocenter at 2018-01-01 02:42 PM

All the easy oil has been harvested. Technology is allowing producers to reach formations that were previously untouchable. Oil isn't a finite
resource.

#2 | Posted by lfthndthrds at 2018-01-02 08:39 AM

isn't = *is

#3 | Posted by lfthndthrds at 2018-01-02 09:57 AM

#2

Without a doubt oil is finite, but with technological advances in clean energy and a shift away from fossil fuels as the primary economic engine, we probably won't ever totally run out of it.

#4 | Posted by Rightocenter at 2018-01-02 12:25 PM

Saudis are shifting away from oil in every sense.

They're doing it slow enough to not panic anyone but they are doing it.

#5 | Posted by Tor at 2018-01-02 03:47 PM

#5

I'm glad someone is paying attention, MBS realizes that the shift to alternative energy, while slower than most progressives would like, in inexorable and is trying to prepare the Kingdom for a post oil world.

#6 | Posted by Rightocenter at 2018-01-02 04:34 PM

Remember the Usual Suspects circle flapping a couple of years ago screaming about "Peak Oil?":

That is a far cry from the days when U.S. production was on what was thought to be an irreversible downward path.
"For years and years, we thought we were running out of oil," Verrastro said. "It took $120 for a barrel of oil to make people experiment with technology, and that has been unbelievably successful. We are the largest oil and gas producer in the world."

Funny how that talking point has quietly dropped out of the Progressive narrative.

#1 | POSTED BY RIGHTOCENTER

That's because it already happened.

Oil prices went way way up. Renewable energy tech swept in and is now taking the burden off oil. The green energy wave is here and has began to dominate even if you can't see it. Coal is dying. As oil becomes harder and more expensive to extract, it will continue to be replaced by green energy that is becoming more and more cost effective.

#7 | Posted by Sycophant at 2018-01-02 04:45 PM

#7

Clever how you completely reiterated my points in 1, 4 and 6.

#8 | Posted by Rightocenter at 2018-01-02 04:48 PM

How much of this can be credited to Bush's Energy Policy Act (2005)? Honest question here.

#9 | Posted by horstngraben at 2018-01-02 05:15 PM

Damn this traffic jam
How I hate to be late
It hurts my motor to run this slow
Damn this traffic jam...

James Taylor

All we need is another Iraq to see $5/gallon gasoline again, and you will pay, because otherwise, you'll lose your job.

What are we here for? When will we see and hear from a leader interested in improving the quality of our lives? All they care about is profits for their donors, even if it means lowering the standard of living for all workers.

#10 | Posted by bayviking at 2018-01-03 08:06 AM

The thing about oil is we don't "just" burn it. Look around you. Keyboard? Monitor? Computer case? Mouse? Cellphone? Cars? Furniture? Clothes? There is oil in plastic.

As said oil is finite. Even if we don't burn it our ever growing population will continue to consume plenty of it for the foreseeable future. That said there are ways to feasibly produce "green" oil today without drilling it. They have just not attracted sufficient attention or funding to be developed due mostly to big oil...

#11 | Posted by GalaxiePete at 2018-01-03 08:42 AM

As said oil is finite. ???? maybe not...

When I worked at Conoco/Phillips in the 90's they were talking about discovering an oil reserve that was under the US and almost as big as the continent. It's definitely a liquid of some kind on the seismographs. They think it's some sort of very heavy crude.

The only problem is that it's 12 miles down. To date, the deepest hole was made by the Russians and only went to just short of 6 miles.

#12 | Posted by Pegasus at 2018-01-03 10:18 PM

2018 should be a rebound year for commodities - or at least, that's what is being writ in magazines like Barrons and Bloomberg

#13 | Posted by GOnoles92 at 2018-01-03 11:12 PM

If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand." - Milton Friedman

Ladies and gentleman, I give you... Venezuela, which has the world's largest oil reserves.

Under Socialism, Venezuela is now out of gasoline.
twitter.com

#14 | Posted by AndreaMackris at 2018-01-03 11:32 PM

Nevan Schmidt 🏳️‍🌈
‏2. Venezuelas Economy is dominated by private industry, making it not socialist.

#15 | Posted by snoofy at 2018-01-03 11:38 PM

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