The booming US oil and gas industry weathered an energy price correction in 2014. Prices for crude dropped 50% in the last half of the year thanks to slowing world economies, weaker demand, and soaring worldwide production, including the US “light tight” shale oil boom which reduced energy imports. In addition, OPEC’s decision in November 2014 to maintain high production quotas rather than reduce supply helped destabilize energy prices, pushing them to new market lows.
But in 2015, global oil demand steadily rose again, averaging 93.3 million b/d in the first six months, up 1.6 million b/d on the year, with strong forecasts for the remainder of 2015 and beyond (IEA).iGas and oil prices are normalizing as US and world markets clear excess inventory and settle into a new equilibrium.
Through it all, US energy has remained incredibly resilient. Fueled by the shale energy boom and new efficiencies in conventional energy extraction, American oil and gas production soared to #1 in the world in 2014, surpassing all other competitors, including Russia and Saudi Arabia.ii
Today, technical advancements in vertical and horizontal drilling and hydraulic fracturing have allowed states like North Dakota, Texas, Utah, and Pennsylvania to lead America’s energy revolution. Oil and gas continue to power the US economy, helping to drive our nation toward energy independence.
For the past six years US production of crude has nearly doubled.iii In 2012, the U.S. reported an oil production increase of 850,000 barrels a day for the largest one-year increase for any country on record.iv During the same year, U.S. natural gas production increased by 4.9%, contributing to the biggest single-year increase in energy (oil and natural gas) production in American history.v By 2014, the US recorded the biggest rise in oil production in the world, becoming the first country ever to grow average annual production by at least 1 million barrels per day for three consecutive years.vi Natural gas production, principally from the Eastern United States, increased 13.9 billion cubic feet per day over a five year period, a total of 5 quadrillion Btu.vii
Fossil fuels continue to be a top commodity around the world, making the continuation of U.S. oil and natural gas exploration inevitable, and the opportunities for prospectors remain stable. Worldwide energy consumption is rising in response to increased global population and rising demand in emerging markets. By 2040, world energy consumption is expected to increase by 37%— and fossil fuels are expected to provide 80% of the world’s energy use.viii
Most of the increase in demand is expected to come from developing markets in places like India and China. Overall, worldwide consumption of petroleum and other liquid fuels is expected to grow from 87 million barrels per day (Mbpd) in 2010 to 115 Mbpd in 2040, an increase of 32%.ix In the US, crude oil production could increase to 16.6 million barrels per day in 2040 (EIA High Oil & Gas Resource case), compared with a peak of 10.6 million barrels per day in 2020.x The United States is expected to transition from being a net importer of natural gas to a net exporter by 2017.xi