Thanks to Texas Tight Oil, the U.S. Now Officially Produces More Oil Than It Imports

Categories: Biz

eagleford.jpg
Buried in an unheralded weekly U.S. petroleum balance sheet released Wednesday was a milestone that not so long ago seemed unimaginable: We pumped more oil out of the ground than we imported for the week ending May 31.

The difference between oil production and imports wasn't huge -- about 80,000 barrels out of 7,300,000 barrels per day extracted domestically. But it's the first time the balance has shifted in this direction since February 1995, according to the U.S. Energy Information Administration.

What's driving the change, of course, is the combination of hydraulic fracturing and horizontal drilling, pioneered here in Texas. Tight oil formations in the Eagle Ford Shale of South Texas and the Permian Basin -- along with production in North Dakota -- allowed the country to meet 88 percent of its energy requirements this spring, Bloomberg reports. That hasn't happened since 1986.

By the end of this year, it's predicted the Eagle Ford will be the biggest tight-oil producing play in the country. And unlike the Bakken Shale in North Dakota, there's no bottleneck, and no shortage of conveyances to get the oil to market. It is, after all, next to one of the largest refinery complexes in the country.

Which is to say, it looks like Texas is going to be oil flush for years to come.

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12 comments
Sotiredofitall
Sotiredofitall topcommenter

It's no longer about supply and demand it's about market manipulation.

"The European Commission raided the offices of Shell, BP and Norway's Statoil this weekas part of an investigation into suspected attempts to manipulate global oil prices spanning more than a decade."

http://money.cnn.com/2013/05/17/news/economy/oil-price-libor/index.html

"Most markets these days are manipulated to some extent, and this is nothing new if we look back through the history of financial markets. But there are some strange things happening right now in the oil market worth mentioning."

http://www.zerohedge.com/contributed/2013-05-21/oil-market-manipulation-reaches-absurd-levels

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

You can blame the evil fraccing for this bonanza ...

Also, Brantley there is a bottleneck in the pipelines from the Eagle Ford to the Gulf Coast refineries.  It is just that it will be easier to alleviate this.

John1073
John1073

And once again proof that "drill baby drill" does nothing to the price of gas. Stupid right wing voters.

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@John1073  

About 6 to 8 years ago there was a significant shift in how the markets address the price of crude oil.  Previously, the price of crude oil was based upon the lifting costs of the the least cost producer, an example of this was in the mid 80's when Saudi Arabia was able to drive down the price of crude to under $5/BBL for a brief period of time.  Now the price of crude oil is based on the cost of obtaining the incremental barrel of production.  Current conventional wisdom is that this is about $75 per barrel.  If you look at the spread between Brent and WTI, you will see that WTI is trading at a significant discount to Brent.  This is due to the inability to move the production out of the Permian Basin by pipeline.  There is also a significant discount for the Williston Basin crudes compared to WTI for the same reason.  Both UP and BNSF have improved margins because of the increased crude oil traffic on their rail systems.

everlastingphelps
everlastingphelps topcommenter

@John1073 Drill Baby Drill was about energy independence, not saving a dollar at the pump.  One of the biggest proponents of energy independence is Barack Obama.  Are you calling him stupid?

TheCredibleHulk
TheCredibleHulk topcommenter

@everlastingphelps @John1073 

I'll call him stupid - Drilling here, in and of itself, will do nothing to make us more independent with regard to oil production. Why would it change considering that every bit of oil produced would just be added into the existing worldwide petroleum market?

There would need to be wholesale changes to the structure of that market before any additional drilling here would produce any meaningful "energy independence" for the United States. Just how much leverage do you think the collective US citizenry or even the US gov't. have over petroleum producers? Why would they EVER knowingly undermine their own profits? Certainly not for any patriotic reasons, these people are capitalists, not altruists.

John1073
John1073

No but you're pretty stupid for thinking it was about energy independence.

Mitt Romney, March 18, 2012: “He gets full credit or blame for what’s happened in this economy, and what’s happened to gasoline prices under his watch, and what’s happened to our schools, and what’s happened to our military forces. All these things are his responsibility while he’s president.”

House Speaker John Boehner (R-OH), April 6, 2012: “The president holds the key to addressing the pain Ohioans are feeling at the gas pump and moving our nation away from its reliance on foreign energy. My question for the president is: what are you waiting for?”

Boehner, April 6, 2012: “The president’s own policies to date have made matters worse and driven up gas prices.”

Senate Minority Leader Mitch McConnell (R-KY), Feb. 28 2012: “This President will go to any length to drive up gas prices and pave the way for his ideological agenda.”

Sen. John Barrasso (R-WY), March 13, 2012: Obama is “fully responsible for what the American public is paying for gasoline.”

RTGolden1
RTGolden1 topcommenter

@John1073 You're kind of comparing Apples to Intergalactic space dust here.  None of those you quoted were the originator of the quote 'drill, baby, drill'.  The quote was made during the 2008 election cycle, your quotes are all from 2012 cycle.  At the 2008 RNC, Michael Steele used it when talking about energy independence, and in October 2008, Palin used it in response to Biden's claim that McCain's only answer to the energy problem was 'drill, drill, drill'.

I would ask the reflective question regarding your opinion of phelps' intelligence here, but we already know the answer and I'm in too polite a mood.

everlastingphelps
everlastingphelps topcommenter

@John1073 Well, whatever you do, don't quote the actual speech where the line was delivered.

"So, do you want to put your country first? Then let’s reduce our dependency on foreign sources of oil and promote oil and gas production at home.

In other words, drill baby drill! And drill now!"

Citing that would be, uh, stupid.

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