(Oil & Gas 360)- It was Thanksgiving Day 2014 when the U.S. oil industry was confronted with its biggest challenge in decades following Saudi Arabia’s attempt to leverage an oil glut of the time to preserve market share while squeezing American oil producers with their higher cost structure. The ploy worked…for a while.
Not only did oil prices fall more than a third to go below $50 a barrel by the end of the year, but the move cost the industry an estimated 300,000 jobs. It was arguably the biggest broadside that America’s oil industry sustained since the Arab oil embargo of 1973.
From some historical perspective, recall that the industry was climbing out of a 2008 nadir, marked by daily production of around five million barrels a day, slightly over half of the 1970 American oil production peak of 9.6 million barrels a day.
So dire were the country’s oil and gas prospects that incoming President Jimmy Carter’s Inaugural Address included his stating that peak oil had indeed arrived, which led shortly thereafter to legislation establishing coal as the preferred energy source for electricity generation.
But the Saudis’ 2014 Thanksgiving Massacre gambit backfired spectacularly as U.S. petroleum and drilling engineers and geologists unleashed the Unconventional Revolution from tight shales exploited by hydraulic fracturing and horizontal drilling.
So pronounced has been the American renaissance in oil production that the country is on a six-year winning streak as the world’s leading oil producer with August’s domestic production at a record 13.4 million barrels per day. January was the only month this year with daily production averaging below thirteen million barrels a day.
The Energy Information Administration (EIA) is predicting another strong year for U.S. oil producers heading into 2025 with projections of daily production pegged at just slightly higher than August’s record at 13.5 million per day. The production numbers include condensate.
That performance would keep U.S. producers ahead of Saudi Arabia and Russia. The three countries today account for about forty percent of global production. America’s production also equates to the combined production of the next three top producing countries, Canada, Iraq, and China, combined. U.S. production is also on par with the combined production of Iran, Brazil, the United Arab Emirates and Kuwait.
Global production in the third quarter of this year, according to the EIA, was over 76 million barrels a day.
By Jim Felton, oilandgas360.com contributor
“The views expressed in this article are solely those of the author and do not necessarily reflect the opinions of Oil & Gas 360.
