In what some in watching economics might consider a private sector resurgence in an economic recovery, the U.S. is increasing oil production and next week will restart mining rare earth minerals after a long absence.
The U.S. Energy Information Administration (EIA) is reporting U.S. daily crude oil production was 5.891 million barrels of oil per day for the week of October 14, 2011. A look at the EIAs chart of weekly U.S. crude production back to January of 1983 shows a slow production fall over two decades. But since January of 2009 the climb back has been steady rising from under 5 million barrels per day to now closing in on 6 million.
Weekly US Field Crude Oil Production
Its looking like a new oil boom based in technology. The production increased from directed and horizontal drilling activity, particularly in the unconventional shale formations. This is paralleling the natural gas increases also from directed and horizontal drilling. The fracturing of reservoir rocks is also a major technology.
The two new techniques are rapidly being adopted across North America and will filter out across the world over the coming years.
The U.S. also has 4.1 million barrels per day of non-crude oil supplies, 2.2 million barrels per day of natural gas liquids, 0.9 million barrels per day of renewable fuels, 0.9 million barrels per day of ethanol plus the 1.1 million barrels per day of refinery process gain.
The result is oil imports are down to 6,557,000 barrels of oil per day for the week of October 14, 2011. This was the lowest level of imports since 1995 – going back 16 years.
Its looking like peak oil is a fuss about nothing while peak demand is a very real thing. But don’t count on that demand peak . . .
Forecasts suggest U.S. crude oil production could increase by 500,000 to 1 million barrels per day each year through 2015 driven by Bakken oil in North Dakota, Eagle Ford in Texas and the Utica Shale.
7 million barrels per day production would be a crude oil rate of the United States that was last seen in 1993. If the U.S. gets to 9 million barrels per day, it would be a new record high crude oil production. Those would be rates comparable to Saudi and Russian, the two largest oil producers.
This week saw Molycorp, Inc., the Western hemisphere’s only producer of rare earth oxides and the leading producer of rare earth oxides outside of China, announce plans to accelerate by approximately three months the initial start-up of its new state-of-the-art rare earth processing facility under construction.
In anticipation of the facility’s accelerated start-up, Mark A. Smith, Molycorp’s President and CEO said Molycorp will commence mining and stockpiling of fresh rare earth ore next week. Accelerating the facility’s initial start-up will increase the company’s estimated 2012 production by approximately 3,500 metric tons, to 8,000–10,000 metric tons, and will enable Molycorp to achieve its full Phase 1 production rate of 19,050 metric tons per year of rare earth oxide equivalent three months earlier than previously planned.
The timing couldn’t be better as China’s Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech, which accounts for nearly half of the world’s light rare-earth production, said Tuesday it would suspend smelting and separation work for a month to use its market power to rally falling rare earth prices.
Worldwide Rare Earth Supply and Demand.
Not long ago China was restricting rare earth exports under what now looks like a guise, due to internal needs. The Chinese economy has grown at better than a 9% rate since.
Having the U.S. firm back in the market and others sure to follow has important implications for the pricing forecasts of goods using rare earth elements and improves the competitiveness of companies worldwide. Those new technologies just got a lot more viable from improved costs.
As noted earlier, these basic parts of raw material resources bode well for the private sector and an economic recovery. Perhaps the U.S. government could get out of the way, stop generating an ever larger regulation burden and maybe, just maybe personal incomes might climb enough to put some energy and confidence back in the housing market.
Hard times, economic slowdowns and recessions are opportunities at the core of an economy. They also wipe away the fat, fluff and fake – setting the fundamentals back on solid footing. Painful as these times are, good things are setting up the future. We’re beginning to see them, and very glad and relieved they’re finally here.
By. Brian Westenhaus