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Dave Cohen

Dave Cohen

Dave Cohen writes the blog Decline Of The Empire. His commentaries cover a wide variety of subjects, including the American economy & macro-economics, the oil…

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U.S. Oil Production Tops 7 Million Barrels-Per-Day

Back in 2006-2007 when I was writing about peak oil, I would never have believed that U.S. crude oil production would reach 7 million barrels-per-day in the last month of 2012. But if we look at the EIA's latest data, that's what happened.

U.S. crude oil production exceeded an average 7 million barrels per day (bbl/d) in November and December 2012, the highest volume since December 1992. The end-of-year data were reported on February 27 in EIA's Petroleum Supply Monthly.

Increasing oil production in North Dakota and onshore Texas
drove the increase in U.S. crude oil production over the last several months (although crude oil production in North Dakota took a dip in November, before increasing again in December). Much of the increase in crude oil production is coming from shale and other tight (very low permeability) formations...

Because of time constraints in publishing monthly petroleum supply statistics, EIA uses an estimate of production for the most recent month. This estimate is derived from actual data reported by federal and state agencies that supply the information in time for EIA's publication. For remaining states, EIA estimates crude oil production using the latest available data from those states. As reported data become available, EIA revises the estimated production data with actual production data. The revised data appear in the historical data series on EIA's website. In the future, EIA is proposing to collect crude oil production data directly from companies in the top-producing states in order to provide a more accurate and timely assessment of U.S. crude oil production volumes.

Related article: Energy Efficiency Vital to Cutting Oil Demand

U.S. crude oil production since 1992

U.S. crude oil production since 2012
Total U.S. crude oil production since 1992 (top), and North Dakota (Bakken Shale) production since January, 2010 (bottom)

I would never have believed (back in 2006-2007) that North Dakota Bakken production would exceed 700,000 barrels-per-day. I also would never have believed that U.S. liquids production would surpass that of Saudi Arabia if you throw in natural gas liquids, refinery gains, moonshine and the kitchen sink.

The U.S. has catapulted past Saudi Arabia as the world's biggest fuel producer, now that abundant production from shale-oil fields has pushed U.S. crude-oil output to a 20-year high.

Long the world's biggest oil consumer, the U.S. took the largest supplier crown in November 2012 for the first time since August 2002, producing 11.654 million barrels a day of liquid fuels, including crude, refined petroleum products like gasoline and other liquids like biofuels, according to the federal Energy Information Administration.

That compared with 11.252 million barrels a day for Saudi Arabia, almost all of it coming in the form of crude oil.

Crude oil is far more important than gas liquids or moonshine, of course, but I will skip that argument today.

They say confession is good for the soul, so let's try it out. What was my mistake?

In this case, I completely underestimated just effective humans can be in extracting a natural resource (crude oil) they desperately need. I confess—I missed the boat here. Mea culpa. It's a mistake I won't make twice.

And as I look back on my mistake, I see just how foolish I was to underestimate humans in the one area of behavior in which they are particularly strong—technological cleverness.

But I don't want to go overboard here because as I have said over and over again, technological cleverness only goes so far. The U.S. will never relive the glory days (pre-1970) of crude oil production.  Geological contraints on production are real and abiding. The race between new production and depletion of old production continues.

Related article: Ethiopia: A Potentially Golden Block on East Africa’s Tertiary Rift

Globally speaking, crude oil will never be cheap again, and if the world economy were booming, as unlikely as that seems, the price of crude would skyrocket to levels never seen previously (over $150/barrel). The peak oil argument isn't wrong because humans were able to wring a few more barrels out of low permeability shales.

It's a matter of timing and circumstances. Although there is still a boatload of unexploited oil in Iraq which will be relatively easy and cheap to produce, the longer term outlook (10-20 years out) for crude oil production does not look good. And since the world economy is in the toilet, and will likely remain there, the constraint on how much oil the world can produce is never tested.

Still, I admit it, I was wrong 6 years ago about how much oil the U.S. could produce in future years. That said, the "miracle" in the Bakken will not go on forever, and there are reasons to believe that production in North Dakota may peak in the near future (the rig count is declining, and decline rates in shale wells are steep). It depends on how many resources (investment, drilling rigs) humans are willing to throw at the problem.

North Dakota production when 170 rigs are used
Achieved and projected North Dakota production when 170 rigs are used to continue to develop the field into the foreseeable future. (ND DMR). There are currently 160 drilling rigs operating in North Dakota. Hat tip to Heading Out at The Oil Drum.

Nowadays peak oil is almost exclusively a Doomer issue. I think less and less about death by crude oil strangulation than I used to. And as some of you already know, Doomers don't care about data because they expect the collapse of everything to come any day now.

Well, I have confessed my sins. Do I feel better?

Yes, actually, I believe I do

By. Dave Cohen




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  • Philip Andrews on March 09 2013 said:
    Now that Mr Cohen has told us how 'wonderful' this all is, can someone else please guive us a more sober and realistic appraisal of the situation?

    Like Gail Tverburg and/or Ferdinand Banks?

    Thanks
    khananel
  • David Ede on March 22 2013 said:
    These shale oil wells deplete rapidly because the oil near the fractures comes out easily, once that oil has been produced the remaining oil trapped in the formation has to migrate through the very tight permeabibity of the shale, this takes a 'geological' timescale: hundreds of thousands of years. To replace the loss of production from depletion you have to drill another well in a new area. Once you've saturated an area in wells and they're all depleting, then you've reached 'peak oil' for that reserve. You can possibly recover 5% of the trapped oil within a human timescale. The other 95% can't be recovered because if you drill new wells and try to fracture the shale differently, you just reopen the old fractures which are already depleted.
  • arjun on May 15 2013 said:
    One surprise outcome of the fracking technology is that it has given a good price for the humble legume called guar , which grows in arid regions of India. Humans will not stall until they retrieve every possible drop of oil. Thereafter it is going to be a charming world of Shires and Clydesdales and Brahman bulls , waterwheels etc.

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