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US poised to become world’s leading liquid petroleum producer

US poised to become world’s leading liquid petroleum producer thumbnail

The US is overtaking Saudi Arabia to become the world’s largest producer of liquid petroleum, in a sign of how its booming oil production has reshaped the energy sector.

US production of oil and related liquids such as ethane and propane was neck-and-neck with Saudi Arabia in June and again in August at about 11.5m barrels a day, according to the International Energy Agency, the watchdog backed by rich countries.

With US production continuing to boom, its output is set to exceed Saudi Arabia’s this month or next for the first time since 1991.

Riyadh has stressed that the rise of the US should not detract from its own critical role in oil markets. It says it has the ability to increase its output by 2.5m b/d if needed to balance supply and demand.

Prince Abdulaziz Bin Salman Bin Abdulaziz, Saudi Arabia’s deputy oil minister, said earlier this month that the kingdom was the “only country with usable spare oil production capacity”.

However, even Saudi officials do not deny that the rise of the US to become the world’s largest petroleum producer – with an even greater lead if its biofuel output of about 1m b/d is included – has played a vital role in stabilising markets.

Global crude prices have fallen in the past two years, in spite of the turmoil in Syria and Iraq, fighting in Libya and Russia’s conflict with Ukraine.

Brent crude hit its lowest level in more than two years last week at about $95.60 a barrel, down from a peak of over $125 a barrel early in 2012.

Over that period, the growth in US production of more than 3.5m b/d has almost equalled the entire increase in world oil supplies.

Interactive map

Mapping the US oil boom

New extraction techniques and high oil prices boost US oil production

The US industry has been transformed by the shale revolution, with advances in the techniques of hydraulic fracturing and horizontal drilling enabling the exploitation of oilfields, particularly in Texas and North Dakota, that were long considered uncommercial.

Crude prices that are high by the standards of a decade or more ago have made it profitable to use those techniques to extract oil.

US production of crude hit 8.87m b/d earlier this month, up from 5m b/d in 2008, and is on course to break through 9m b/d before the end of the year.

Rising oil and gas production has caused the US trade deficit in energy to shrink, and prompted a wave of investment in petrochemicals and other related industries.

It is also having an impact on global security. Imports are expected to provide just 21 per cent of US liquid fuel consumption next year, down from 60 per cent in 2005.

Although that decreased import dependence has not led the US to disengage from the Middle East, it has encouraged calls for a reduced military commitment to the region.

China’s emergence as a larger oil importer than the US has increased its interest in the Middle East, reflected in the first visit by a Chinese warship to Iran this week.

US crude oil production in August was still lower than either Saudi Arabia’s, at about 9.7m b/d, or Russia’s at 10.1m b/d. The overall US leadership in petroleum is accounted for by its higher production of natural gas liquids such as ethane and propane, which have a lower energy content and are often used as feedstocks for the petrochemical industry rather than for fuel.

Still, on current trends the US could catch up with Saudi Arabia and Russia on crude production alone by the end of the decade.

FT

 



40 Comments on "US poised to become world’s leading liquid petroleum producer"

  1. Plantagenet on Tue, 30th Sep 2014 10:41 am 

    Fracking has produced a gusher of oil in the US. Ten years ago no one ever dreamed that US oil production would grow to pass KSA and Russia. Of course, the real question is—-how long can the US keep this up?

  2. JuanP on Tue, 30th Sep 2014 11:07 am 

    “Riyadh has stressed that the rise of the US should not detract from its own critical role in oil markets. It says it has the ability to increase its output by 2.5m b/d if needed to balance supply and demand.”
    I doubt they have more than one million in spare capacity. Befrore they cut down in August, they were probably going at full blow.
    “…and Russia’s conflict with Ukraine.”
    It is always called Russia’s conflict with Ukraine in Western media, never what it really is, a proxy civil war between the USA and Russia, using Ukrainians as canon fodder.
    The propaganda campaign doesn’t stop for a second.

  3. Northwest Resident on Tue, 30th Sep 2014 11:08 am 

    Plant — That would be more correctly stated as “Fracking has produced a gusher of assorted liquids and chemicals, some of which is actually oil.”

    But shouldn’t we be asking how much net energy is made available to the economy for each barrel of fracked liquids produced, instead of merely counting each barrel as if it were a REAL barrel of oil and assuming that we get the same energy from that barrel as we get from the real barrels of conventional crude that have powered our economy all these many years. If we asked that question, the answer would be “zero to not much.” But yeah, a gusher of fracked liquids — it keeps the illusion of BAU alive at least, for now.

  4. JuanP on Tue, 30th Sep 2014 11:14 am 

    “Still, on current trends the US could catch up with Saudi Arabia and Russia on crude production alone by the end of the decade.”
    Current trends are obviously completely unsustainable. The USA might catch up with those countries, but it unlikely to be because of current trends, IMO.

  5. Northwest Resident on Tue, 30th Sep 2014 11:16 am 

    JuanP — I decided to major in Public Relations in college because of my interest in politics and how PR could be used to achieve great things by influencing the masses in positive ways. Little did I realize back then to what extent the powers of PR — the manipulative and extremely persuasive powers that have been boiled down to a near science — could be used in such devious ways, and for such questionable purposes. However, I know at least one or two of my former professors who might argue that there is a benefit to society in deceiving people into thinking this is “Russia’s war” — and it would be based on the Machiavellian principle of the greatest good for the greatest number of people, despite the fact that one or more people really get the screw-job in the process. Who knows, maybe the world is on the brink of falling apart right now and TPTB are desperately attempting to keep it held together for just a little while longer, with the Russia/Ukraine conflict and the public belief that this is Russia’s war an integral part of that plan??? Yeah, I know, that’s a real stretch — but we live in an extremely complex world where nothing is at it seems to be, and who knows what the REAL reasons are for that conflict or for the massive disinformation surrounding it.

  6. JuanP on Tue, 30th Sep 2014 11:43 am 

    NWR, I use my TV mostly as an education tool, and it is great for that. Unfortunately most people don’t want to think on their free time, they prefer to be manipulated and entertained instead. The potential is clear, the waste, too.
    One of the great PR successes I think of frequently is the excellent Brazilian family planning program. By writing very popular soap operas with characters that had few or no children and led happy, successful lives in Brazil, and playing them for years in the major networks, they managed to change family planning decisions by the masses faster than most countries in the world. This led to very significant decreases in fertility, leading to today’s 1.79 child/woman.

  7. shortonoil on Tue, 30th Sep 2014 12:32 pm 

    Petroleum prices continue their march downward, while production costs continue to rise. That is the big story, not that there is all kinds of oil out there. We know that there is a huge amount of oil still in the ground. The USGS thinks there could be 4,200 Gb remaining. It is not the quantity of remaining petroleum that is collapsing global economies, it is the quality of oil now reaching the market.

    The average barrel has gone from an energy power house that provided for a hundred years of constant economic growth, to a feeble purveyor that can only keep the wheels barely turning with the assistance of massive central bank printing. Petroleum is a commodity that has passed its hay day, and we are beginning to witness the ramifications of its decline. Only a few years remain for us to claim that we live in the age of oil. Blinded by the shiny stacks of newly pumped barrels, the media is like a moth fluttering around a candle. Soon their fluttering will bring them to the flame.

    http://www.thehillsgroup.org/

  8. coffeeguyzz on Tue, 30th Sep 2014 12:58 pm 

    U.S. production of crude oil hit 8.87 million barrels per day this past month … If one were to scan backwards even these past few months at so many predictions of crude’s output (let alone the past year or two), one would immediately see how far in excess the reality has been versus the projections.
    No matter where one stands on the political/ideological spectrum regarding industrialization, fossil fuels, population growth, etc., those who have called for a fraction of the oil production that has already come to pass (here’s lookin’ at you, Rune), have been thoroughly discredited.
    Those who persist in their collective inability to recognize the rapidly, continuously changing paradigm of hydrocarbon availability, are careening towards the same status of irrelevant marginalization.

  9. Davy on Tue, 30th Sep 2014 1:27 pm 

    This is great news but it is still projected we are not there yet. A lot of clouds on the horizon anything can happen in the next 18 months. It is also a dangerous condition for a people manipulated by a corrupt cable of politicians, bankster, msm conglomerates, industry, and the high net worth parasites. These folks are using this distorted news to influence energy policy, rack up huge debts for individual profit that may be institutionalized bailouts, and gull the natives into a false sense of security. If all this was not bad enough it is a retirement party complete with a guaranteed big hangover. For me it has been great it has meant several years of prep investments. I hope I have 3 more. Drill baby drill then run for the hills folks!!!!

  10. rockman on Tue, 30th Sep 2014 2:07 pm 

    Davy – Great news? A very simpler question: why would this be perceived as good news for the US consumer? They don’t care how much oil this country produces. They do greatly care how much they pay for products refined from oil. And given the obvious fact that US oil production has increased because oil prices have risen 300% why exactly should the vast majority of the public be celebrating? Bragging rights? Not hardly.

    Granted it’s great news for the Rockman and his cohorts. I’m always amazed as these debates as to how good the news is about increased US oil production. Since we were importing more oil the cost of oil to the US economy has increased over $400 billion/year as we’ve decreased our oil imports. The decrease in oil imports hasn’t even reduced our oil trade deficit: we might be importing fewer bbls of oil but we are sending more $’s overseas for what we do import.

    I really am starting to find it very irritating with this endless focus on movement of bbls of oil and not on the economic impact on the US economy and our consumers of the production/price dynamics. Everyone happier paying $3.40+/gal of gasoline then when they were paying $1.40/gal or less? Raise your hand. Hmm…I can only see my own hand raised at the moment. What…no one else thinks the bragging rights are worth the increased cost of your energy? LOL.

  11. Davy on Tue, 30th Sep 2014 2:42 pm 

    Rock, my point is from a macro systematic view. Would it have better to have less or more in the grand scheme of things. I agree with your oil patch reality pitch. What I said was it bought a few years more BAU. I was not implying anything more. In fact the whole subject I treat with sarcasm as all of our retirement party. I also see it as nothing more than a debt Ponzi scheme in the longer run. It helped me out. It is making my family a ton of money which helps me out indirectly. I see no conflict in your point and mine.

  12. meld on Tue, 30th Sep 2014 2:46 pm 

    @plant – we could grow enough biofuel and algae to power the world for ever …if the pesky laws of entropy didn’t get in the way. Shale oil is snake oil and it’s going to pop in 5…4….3..2….

  13. meld on Tue, 30th Sep 2014 2:48 pm 

    BAU will be the end of us. If we had let the markets work in a proper free way back in 2008 then we would be living in a vastly different world right now but it would be a much better prepared world for the coming shit storms

  14. Davy on Tue, 30th Sep 2014 2:51 pm 

    Meld, yes and no. Me personally I am very much better now. The physical world no. Every day that goes by is more mouths and more irreparable damage to Nature and all her beauty. I’m ready let er rip. Katy bar the door. She goin down.

  15. Newfie on Tue, 30th Sep 2014 2:56 pm 

    First the boom… Then the bust.
    As surely as night follows day.

  16. danny on Tue, 30th Sep 2014 3:37 pm 

    Davy said “For me it has been great it has meant several years of prep investments. I hope I have 3 more. Drill baby drill then run for the hills folks”

    Does this mean you have nothing in the stock market and banks?….I have people keep telling me to that I have to put money in the stock market for retirement…I am 38 and feel that if I do I will never see it again….i also have been slowly taking cash out of the bank just not to alarm anyone….I tell people peak oil theory and they just think I am a crazy Indian..They have University and hospital pensions which they think are so safe but I tell them it is just the opposite… those are probably the most bloated systems out there and the first to fail..but by my calculations I see there is no possible way this can go on another 3 years…..1.5 at tops we are already seeing old oil drum predictions come true exactly….the middle east…Russia next cue more trouble in Israel and then the Chinese dragon is going to wake up…I am just hoping there is not going to be WW3 or all preparations will be futile…Meeting with some people from Texas specifically Midland and I will not say anything when they brag about their money and investments…they are in real estate…I wonder if oil is $96 how much is it to get it out of the ground and transport it and refine it?

  17. meld on Tue, 30th Sep 2014 3:44 pm 

    @ Davy – I hope your prepping has been mainly community building rather than just buying guns and stocking up on food. The “preppers” will be the first to be isolated and made targets of.

  18. marmico on Tue, 30th Sep 2014 4:05 pm 

    The decrease in oil imports hasn’t even reduced our oil trade deficit: we might be importing fewer bbls of oil but we are sending more $’s overseas for what we do import.

    No. The nominal 2014 petroleum trade deficit (~$200 billion) will be lower than in any year going back to 2005 and less than half the deficit recorded in 2008 when U.S. production troughed.

  19. Davy on Tue, 30th Sep 2014 5:12 pm 

    Marm, let’s sing kumbaya together all holding hands in the sunset. I am so relieved. That’s like telling a terminally ill person he won the lottery.

  20. Davy on Tue, 30th Sep 2014 5:14 pm 

    Meld, we are ready here in the Ozarks. Nobody ever had much here. You scrape together a living best you can. I am ready and organized. No one knows what I have or cares. They all have stuff to.

  21. ghung on Tue, 30th Sep 2014 5:33 pm 

    Don’t even bother, Davy. Most of these people have no clue about life in the Ozarks and Appalachians. Community such as we have in these places is very different from any sense of community urban/suburban dwellers may think they have. It’s easy to spot by their obvious level of paranoia which they project at folks like us. I guess they think we’re rural hermits who fear contact with each other and covet each other’s stuff. Around here, if there’s a need, all one has to do is ask and they’ll likely be overwhelmed by the level of response. Beats the shit out of trying to take what you want or need.

  22. Aspera on Tue, 30th Sep 2014 5:46 pm 

    ghung: We’ve got this notion around here about “Well Fed Neighbors.” The idea is broader than just about food and it fits your perspective on community.

    I guess others will says it’s just the old idea of enlightened self-interest. But it sure feels like something bigger. Plus, at least in our experience, it’s not about “helping others” as it is about “working and sharing with others.”

    I have never in my life felt more contentment than when I worked with some neighbors to get some hay from one of their fields put up in the barn. I’d be surprised if any of my long-ago suburban acquaintances ever felt that feeling quite so intensely.

  23. Davy on Tue, 30th Sep 2014 6:08 pm 

    I’m with ya Aspera and G.

  24. Apneaman on Tue, 30th Sep 2014 6:33 pm 

    How sad that the bar is now so low that a few extra barrels of liquid from the source rock is cause for celebration. My third favorite wizard was just commenting the other day on desperation levels going up and the denial getting louder as we near the end.

    http://thearchdruidreport.blogspot.ca/2014/09/dark-age-america-senility-of-elites.html

  25. ghung on Tue, 30th Sep 2014 7:03 pm 

    Off the mark again, Apneaman. You’re certainly not seeing any celebration from me about ‘a few extra barrels of liquid from the source rock’. Most of us here know what’s coming.

  26. Nony on Tue, 30th Sep 2014 7:30 pm 

    How many TOD writers predicted the shale oil boom?

  27. Aspera on Tue, 30th Sep 2014 7:38 pm 

    How many boomers acknowledge its financial unsustainability, high decline rate, high consumer-cost of the product AND ecological impacts? Or… any one of those?

    I predict that there will be respites from energy descent. They might be termed “cornucopian traps.” Shale oil might be one example.

  28. rockman on Tue, 30th Sep 2014 7:59 pm 

    Davy – It might have sounded like I was taking a potshot at you but it was unintentional. Just used your comment as a springboard.

    And: “The nominal 2014 petroleum trade deficit (~$200 billion) will be lower than in any year going back to 2005 and less than half the deficit recorded in 2008 when U.S. production troughed.” Exactly what I said: the US oil trade deficit back before the surge in US production surge.

  29. Davy on Tue, 30th Sep 2014 8:13 pm 

    Rock, on board with your message. Of course no offense taken.

  30. Apneaman on Tue, 30th Sep 2014 8:59 pm 

    ghung

    Don’t recall addressing you specifically. Feeling a little touchy? As for “most of us” It would be more accurate to say some. Nothing to trip out about.
    Speaking of trips, better get em in while you can.

    http://www.buenosairesherald.com/article/170902/airlines-in-the-us-fly-slower-and-even-cut-water-on-

  31. Makati1 on Tue, 30th Sep 2014 9:01 pm 

    Fortress mentalities will prove to be the death traps they are. Also the: “I live in a different part of the US where…” is lying to yourself about your safety.

    Most ‘back woods’ areas live off of the government. The amount of wildlife and wild food would not last the first winter. Then the fat neighbors will be the next to go.

    If you have more than your neighbor, no matter where in the world you live, you will be a target. A hungry man will kill to eat, especially if he has a family to care for. And you cannot avoid sleep for very long…

  32. Aspera on Tue, 30th Sep 2014 9:05 pm 

    True. Yet “fortress mentalities” and a community of “well fed neighbors” sounds like they could be at the opposite ends of some continuum.

    Sharon Astyk had an “adapting in place” notion that didn’t sound at all like heading for the back woods.

  33. Davy on Tue, 30th Sep 2014 10:10 pm 

    Yoda, must be talking about his mountain jungle hideaway in the Phillipeans were his 70’s are going to be spent. He talks about living to 90 like someone in his family. Folks you and I know people in their 70’s. How many could live in the jungle. Yoda You need to come back to the US where you can get a descent nursing home room or maybe a room at the outpatient psych ward.

  34. Plantagenet on Tue, 30th Sep 2014 10:12 pm 

    @apneaman You said “Fracking has produced just “a few extra barrels”.

    Make that a few BILLION extra barrels. The Bakken has 7 BILLION, the Eagle Ford maybe 12 BILLION, and some estimates put the Permian at 70 BLLION extra barrels of oil.

    So you were only off the mark by 90 BILLION barrels.

  35. Craig Ruchman on Tue, 30th Sep 2014 10:38 pm 

    As an investor in solar; because of an oil glut, I might have to reconsider my holdings. Peak oil seem a bit more distant these days…

  36. Northwest Resident on Tue, 30th Sep 2014 11:16 pm 

    That would be “90 BILLION barrels” of assorted liquids, a portion of which is oil. Factor in all the oil required to extract that “90 BILLION barrels” of assorted liquids, the oil required to transport it to the refineries, the oil required to refine it and the oil required to deliver it to final point of sale, and what do you end up with in terms of net energy. Not a whole heck of a lot — definitely not enough to make anything but a tiny dent in the energy needs of the world. A barrel of shale assorted liquids is vastly inferior to what we used to think of as a barrel of oil. Keep that in mind when the shale enthusiasts do their victory dances over all the “barrels of oil” being produced from shale.

  37. meld on Wed, 1st Oct 2014 2:07 am 

    No good explaining it to him NWR, he just refuses to understand the concept of net energy. He thinks 100 barrels of oil is 100 barrels of oil. Completely missing the point that there is less energy available to society for health care, retirement, roads, infastructure , etc. etc. The world must be a confusing place to Plant.

  38. Davy on Wed, 1st Oct 2014 5:32 am 

    Meld/NR, I have noticed a budding acceptance but not yet conversion to our line of thinking in Planter. Planter is a smart guy and being smart one cannot discount hard facts and realities. Net energy is part of Nature’s energy laws. How the hell can you argue with that? I mean it is like arguing gravity on the earth or the moon. Gravity is relative to the body of mass involved. Net energy is relative to the type and content of the oil. Planter know shale resource contents. Folks I am a “sell-by-date” corny or doomer lite so I can relate to our hard core Corns here. This means I am enjoying life to the fullest, busy prepping, and optimistic for a few years. The Cornies have reasons to preach optimism. The doomer part in me is when that Corn lifestyle becomes dated. I will transition to something very much different. I would prefer the label “dropper”. Doom implies certain death and that is not the case other than we are all going to die eventually. I think about “dropping” daily with things as little as my must have coffee in the morning. Coffee enjoyment daily may be problematic someday. I think about my wonderfully diverse diet and how that is going to become seasonal and local. I try to imagine doing things around the farm without a trip to Lowes. When I am on the highway doing my bi-monthly commute wondering if I will be riding a horse for a day to see my kids. I often wonder about my health. What am I going to do if a health condition develops and the medical system is primitive? In the here and now I am very optimistic for 2-3 years. Life has never been better.

  39. Davy on Wed, 1st Oct 2014 5:40 am 

    Craig, you are missing the point on PO and AltE. Both are dated and investing in the market at this point is risky knowing what we know now. Large scale AltE will follow PO down. The glut you see now is part of PO dynamics. Just wait around and you will see systematic dynamics in action. Your best investment is pull that money out of the market and invest in resilience and sustainability at home with a solar system and other redundancies. Maybe have wood heat. Look at natural air conditioning. What about backup food. Now is the time to be investing in those things. The market is a Ponzi scheme. It is until it isn’t then there is nothing but tears for those late to the game.

  40. Apneaman on Wed, 1st Oct 2014 2:24 pm 

    Plantagenet

    So net energy is good for a year or so of world oil demand. Factor in the environmental, social and infrastructural externalites and your left with fuck all. A few extra trips to the dollar store for some more plastic junk, that will be in the land fill in two weeks, and a few more boxes of Lil Debbie’s snack cakes to help with the national diabetes and obesity project – No Child Left Behind. Counting barrels is just another form denial of our host of self made predicaments. It changes nothing.

    http://www.ecointernet.org/2014/10/01/ebola-a-symptom-of-ecological-and-social-collapse/

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