It is the beginning of a New Year, and belatedly, I hope that all readers find this new period to be one of prosperity, health and happiness. It would be encouraging if the portents for our energy future would point in that direction, but unfortunately I can’t see nearly as much optimism in that regard as do others who are similarly reviewing where the global energy supply numbers are going. This week the EIA’s ”The Week in Petroleum” is illustrative of the optimistic vision.
Figure 1. Recent projection from the EIA on American Oil Production (EIA TWIP Jan 9, 2013)
This plot is from the new Short-Term Energy Outlook from the EIA, which projects the numbers through to 2014, at which time: the Agency anticipates that US domestic production will rise to 7.9 mbd, the highest since 1988. Growth is expected to extend beyond just the Bakken:
In particular, drilling in tight oil plays in the Williston (which includes the Bakken formation), Western Gulf (which includes the Eagle Ford formation), and Permian basins are expected to account for the bulk of growth through 2014. Williston Basin production is expected to rise from an estimated December 2012 level of 0.8 million bbl/d to 1.2 million bbl/d in December 2014. Western Gulf Basin production rises from an estimated December 2012 level of 1.1 million bbl/d to 1.8 million bbl/d in December 2014. Within the Western Gulf Basin, roughly 0.4 million bbl/d of the oil production is outside of the Eagle Ford formation. The Western Gulf Basin accounts for more than half of the onshore domestic liquids production growth due to a comparatively large amount of liquids coming from both oil and gas wells compared with the other key production basins. The Permian Basin in West Texas, which includes plays such as Spraberry, Bonespring, and Wolfcamp, is a third key growth area. EIA estimates that crude oil production from the Permian Basin reached 1.2 million bbl/d in December 2012. Permian Basin production is projected to increase to 1.4 million bbl/d in December 2014.
The long decline in oil production in the US reversed itself under Obama’s first term. It has continued to rise and now stands higher than in 25 years.
This does not mean that oil is cheap. we have pretty much pulled most of the cheap oil out of the ground – all the $1 a gallon gasoline, so to speak. We are now pulling out the oil that represents maybe $3.30 a gallon of gas.
But we are pulling it out, at such high levels that there are now very severe changes happening in the direction oil refinery stocks travel – instead of the Gulf Coast as oil was imported , now it comes from the mid-US.