Monday, September 24, 2018

US 'likely' has taken over as the world's top oil producer

The United States may have reclaimed the title of the world's biggest oil producer sooner than expected.

The U.S. Energy Information Administration said Wednesday that, based on preliminary estimates, America "likely surpassed" Russia in June and August after jumping over Saudi Arabia earlier this year.

If those estimates are right, it would mark the first time since 1973 that the U.S. has led the world in output, according to government figures.

The energy information administration and the International Energy Agency, a global group of oil-consuming nations, had predicted that the U.S. would eventually pass Russia and Saudi Arabia but possibly not until 2019.

U.S. production jumped in recent years because of techniques including hydraulic fracturing, or "fracking," which is the use of chemicals, sand, water and high pressure to crack rock formations deep below ground, releasing more oil and natural gas.

Fracking is driving a drilling boom in the Permian Basin under Texas and New Mexico. The practice is controversial, however. Opponents say that fracking results in toxic contamination of groundwater and increases the number of earthquakes in places like Oklahoma and Texas.

The U.S. energy agency estimated that the United States produced an average of 10.9 million barrels a day in August, compared with about 10.8 million barrels a day by Russia and around 10.4 million from Saudi Arabia. It said the U.S. passed Saudi Arabia in February for the first time in more than two decades, and this summer it topped Russia for the first time since 1999.

The agency expects the U.S. will continue to top Russia and Saudi Arabia for the rest of this year and through 2019.

U.S. production has soared since 2011, led by output from the Permian Basin, North Dakota and the Gulf of Mexico. The pace of drilling slowed after oil prices tumbled starting in 2014, but roared back as operators learned to produce oil more efficiently and crude prices rebounded.

Production has been relatively steady in Russia and Saudi Arabia, both of which took part in an OPEC agreement to limit output beginning in 2016 to drive up prices.

The U.S. agency said its data on Russian production comes mainly from the Russian Ministry of Oil but also oil companies and industry publications. The agency said figures on Saudi output are based on its own internal estimates.

The U.S. led the world in oil production for much of the last century until the Soviet Union and later Saudi Arabia passed it during the 1970s. Until the last few years, it seemed far-fetched that the U.S. would ever regain the No. 1 spot.

Daniel Yergin, author of "The Prize," a history of the oil industry, said the rebound of U.S. production helped avert a severe shortage of world oil that would have sent prices far higher.

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