US Oil Production Tops 10 Million Barrels A Day First Time Since 1970
U.S. oil production broke 10 million barrels a day for the first time in 48 years in November, according to new monthly data released by the government on Wednesday.
While U.S. production has been rising as prices rose, the 10 million barrel mark is an important milestone that reinforces America's place in the energy big leagues and also its aspiration to use its new oil dominance in diplomacy.
The U.S. last produced 10 million barrels a day in November, 1970, just when production peaked before a very long decline, according to U.S. Energy Department monthly data. Unlike 1970, U.S. oil production in 2018 is on an upswing, and U.S. shale and other producers are expected to add more than 1 million barrels a day this year alone for an average production rate government forecasts put at 10.3 million barrels a day.
"This is significant in market terms, and it's very significant psychologically. The U.S. is back big time as an oil producer and could be by next year the largest in the world. We're one of the big three now, and we could be number one," said Daniel Yergin, vice chairman IHS Markit. Saudi Arabia was producing 10.6 million barrels a day before it cut back production to steady the oil price by reducing new supply, and Russia has been drilling about 11 million barrels a day.
The U.S. produced 10.038 million barrels a day in November, and produced 10.044 million in November, 1970. In weekly EIA data that will be revised, the U.S. produced 9.92 million barrels a day last week, up sharply from 8.9 million barrels a day a year ago.
"Just a decade ago, our net imports were 60 percent of total demand. Now, they're 20 percent," said Yergin. U.S. oil production, in fact, was half of what it is now a decade ago, during the financial crisis in 2008. But the high oil prices of 2008 were also the catalyst that propelled the U.S. shale industry, which has used evolving new technologies to extract oil from places once thought impossible.
"The U.S. could add upwards of 2 million barrels a day from where we are today by the end of 2019," said Yergin.
The U.S., still an importer of crude, imported an average 8 million barrels a day over the past several weeks. The U.S. exported 1.77 million barrels of crude a day last week, and another 4.8 million barrels of refined products including gasoline, diesel and jet fuel.
Harold Hamm, Continental Resources CEO, said on CNBC Wednesday that the U.S. could be a net exporter of oil by 2020.
Critics of U.S. shale say the production is front-loaded with the biggest gains coming when wells are initially drilled, but the industry has continued to make itself more and more efficient, lowering its costs at the same time. Hamm said the Bakken, in North Dakota, still has a ways to run and its only the "third inning" in terms of development.