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QUOTE O’ THE DAY
"While the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit.”
-- Robert Mankoff's Cartoon Banker
Page added on January 30, 2012
Texas used to be a king of the energy industry, but Texas circa-2012 isn’t the same oil giant that it was in the 1970s – in fact few states are, according to a new report.
Economist James Hamilton wrote in his new National Bureau of Economic Research paper that the boom in domestic oil production is still nowhere near enough to reverse the severe decline since 1970.
Due to shale drilling North Dakota, Texas and elsewhere, oil production in the U.S. has risen to 6 million barrels of oil per day. But it’s still a far cry from the more than 10 million barrels a day produced in 1970.
And Texas is no exception.
Despite the Eagle Ford and Barnett shale plays, Texas’ oil production has slowly dwindled since peaking in 1972. Today, the Lone Star State produces roughly a third of what it did in 1972.
But don’t get down on yourselves Texans.
California, Oklahoma, Louisiana, Pennsylvania, Ohio, West Virginia, New York and nearly every other oil-producing state have all seen oil production take a nose dive at various points over the last century, according to Hamilton.
The star in this picture is North Dakota. The state is the only place that continues to set all-time records for production – thanks, of course, to the Bakken shale play.
But as Hamilton writes, it’s still only a fraction of what other states produced during their peaks.
“To put the new Williston Basin production in perspective, the 138 million barrels produced in North Dakota and Montana in 2010 is about half of what the state of Oklahoma produced in 1927 and a fifth of what the state of Alaska produced in 1988.”
Hamilton wrote that advancements, such as hydraulic fracturing, have opened up more areas in the U.S., and oil production is likely to increase. However, he said oil production follows a predictable pattern – initial increase followed by eventual decline.
The decline usually comes as new developments open up, which is a bit of good news.
Of course, the oil peak has been long discussed, dissected and predicted by the energy industry.
Experts have suggested new technology and other advancements could help oil production rise to new heights in the coming years.
Bentek Energy last year projected oil production in West Texas’ Permian Basin, South Texas’ Eagle Ford shale, and North Dakota’s Bakken shale will record a rise of a little over 2 million barrels per day from 2010 to 2016.
So a new peak might be in sight or the glory days might be over.