According to the International Energy Agency, the ‘U.S. will surpass Russia and Saudi Arabia as the world’s top oil producer by 2015 and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations.’
The U.S. has a central role to play in global oil and natural gas production. Through innovation, technology and some of the best hydrocarbon-bearing rocks in the world, the U.S. is poised to become one of the largest producers of oil and natural gas.
From Shortage to Abundance
Since the 1970s, U.S. consumers have feared there won’t be enough energy to meet consumer demand. That has changed. We’ve known for a number of years that we have an abundance of natural gas. Now we also know we can recover plenty of oil to meet the needs of current and future generations. The U.S. now ranks as the world’s top natural gas producer and the second-largest oil producer – and may soon pass Saudi Arabia as the top producer.
The U.S. Energy Information Administration (EIA) estimates that U.S. total crude oil production averaged 8.9 million barrels per day in September 2014, driven largely by growth in tight oil production. To put that in perspective, U.S. total crude oil production averaged 7.5 million barrels per day in 2013 and 6.55 million barrels per day in 2012. Recent increases in U.S. oil production due to tight oil are the largest since Colonel Edwin Drake drilled the first oil well in Pennsylvania in 1859.
Unlocking “Unconventional” Reservoirs
We’ve known for years that shale rock contains oil and natural gas that was too “tight” (or impermeable) to allow commercial production. Ongoing research and development optimized two key innovations. The first was hydraulic fracturing also known as “fracking” – injecting water under high pressure to create narrow microfissures in the rock. Since the late 1940s it has been used safely in more than a million wells. Separate research during the 1980s made it possible to drill wells that curve out laterally, thus gaining exposure to more potentially productive rock than was possible with conventional vertical wells. Hydraulic fracturing and horizontal wells were first combined in shale wells in the late 1990s, enabling commercial production of unconventional reservoirs.
"Conventional" Production Continues
Even as rising oil and natural gas production from shale formations and deepwater development is driving overall U.S. production higher, volumes from conventional onshore reservoirs remain essential. The country’s thousands of conventional oil and natural gas fields, which are spread across 32 states, contribute more than half of total U.S. petroleum liquids production, as well as over 40% of natural gas production. Although total volumes from conventional fields have been declining, those declines are expected to flatten and even reverse. The same techniques that made possible the shale revolution – fracking and horizontal drilling – are predicted to improve resource recovery from older fields. New facilities, such as a planned Alaska natural gas pipeline and liquefaction plant, will make commercial gas production from the North Slope feasible. Alaska still holds one-tenth of total U.S. oil reserves, with production of 500,000 barrels per day.