America produced just under 30 MMBOEPD last year
The shale revolution has transformed the American energy industry, making the U.S. the world’s largest producer of oil and gas. The country has now retained this crown for five years in a row, surpassing both Russia and Saudi Arabia.
The U.S. produced just under 30 MMBOEPD in 2017, an all-time record. Natural gas and petroleum hydrocarbon output each exceed that of Russia or Saudi Arabia, powered by the industry’s recovery from the price downturn. In the past ten years, American production of oil and gas has grown by almost 60%. The shale revolution has marked the most rapid growth in U.S. oil and gas output since the 1950s, when the U.S. first began producing natural gas in large volumes.
NGPL, biofuel boost U.S. petroleum output
U.S. production of petroleum rose by 745 MBPD last year, reversing the decline seen in 2016. Russian production of petroleum was essentially flat, while Saudi production fell as OPEC cut production to boost prices.
Petroleum production includes not only crude oil, but also NGL, heavy oil, natural gas plant liquids and other liquids. Including these products gives the U.S. the crown of largest petroleum producer in the world, as these account for almost 40% of U.S. output. The country produces significant volumes of NGPLs, 24% of total output, and biofuels and complex refineries also add to production. These products are much less influential in Russia and Saudi Arabia, however, where the vast majority of total petroleum production is crude oil.
Russia getting closer in natural gas production
American natural gas production was up slightly in 2017, primarily because growth stagnated in the early portion of the year. After June, however, output began to rise significantly, and Q4 production exceeded that of Q1 by 5.7 Bcf/d. Even if production simply held flat in 2018, the U.S. will achieve meaningful yearly production growth.
Russian and Saudi natural gas production rose rapidly in 2017, with 8% and 6% growth, respectively. Russian gas production is relatively close to that of the U.S., but Saudi output is much smaller, about one seventh of the U.S. However, natural gas may increase in importance in the country in coming years, as it seeks to make better use of its crude oil. The country uses nearly 500 MBOPD in crude oil to generate electricity last year, a process that is generally not the most economic use of crude oil. The nation is developing several natural gas fields, which could power gas generators, allowing the country to export this crude.
Significant growth in oil, gas production expected in 2018
The most recent Short-Term Energy Outlook predicts the U.S. will produce 17.6 MMBPD in 2018, which would represent significant growth beyond 2017 levels. Gas production forecasts are similar, with the STEO predicting 9.4% growth in U.S. gas production this year.
Russian production is expected to average 11.2 MMBPD in 2018, flat with 2017 output. Saudi production is somewhat uncertain, as the OPEC cuts may be changed in response to market conditions. While the group is pledged to continue its cuts through the rest of the year, the collapse in production from Venezuela and potential for sanctions on Iran may drive the cartel to increase output.
