The US Energy Information Administration (EIA) is reporting today that US crude oil production exceeded 7 million barrels per day (bpd) in both November (7.01 million bpd) and December (7.03 million bpd) last year, which was the highest level of domestic crude oil production since December 1992 (7.10 million bpd), 20 years ago.
The EIA credits: a) increasing oil production in North Dakota and Texas for driving the increase in U.S. crude oil production to a 20-year high, and b) the increasing amount of domestic crude oil production that is now coming from shale and other tight (very low permeability) formations.
As I reported yesterday, oil output has increased so dramatically in both Texas and North Dakota in recent years, that if those two oil-producing states were considered as a separate country, they would be the 9th largest oil-producing nation in the world with combined output of almost 3 million bpd in December. Thanks to the shale oil bonanza in the North Dakota Bakken and the Texas Eagle Ford Shale, those two states together now produce between 42% and 43% of all US oil output, an unprecedented record high share of US oil output for those two (or any two) states. As recently as the summer of 2009, Texas and North Dakota together produced less than 24% of America’s domestic crude oil output. But that all changed when the revolutionary extraction technologies of hydraulic fracturing and horizontal drilling starting accessing oceans of oil trapped inside shale rock miles below the ground in Texas and North Dakota.
Bottom Line: In just the last 18 months since July 2011, US oil output has increased by more than 1.5 million bpd (and by more than 24%), and half of that increase (773,000 bpd) has come just from the state of Texas, largely from increases in the Eagle Ford Shale area, which has been described as the most profitable oil field in the world with dozens of “monster wells” producing up to 5,000 bpd of crude oil. See my report yesterday on Texas oil here. The ongoing and significant increases in US oil and gas production are delivering a powerful economic stimulus to the US economy, bringing: a) thousands of new shovel ready jobs to states like North Dakota, Texas and Pennsylvania, b) billions of dollars in new investment to those states, and c) billions of dollars in royalty payments to private landowners.