The decade of 2010 to 2019 began with a bucket full of optimism for the oil and gas industry in the United States and Texas by many analysts from around the world. Not only did the industry meet those expectations, it exceeded them and reached new heights very few predicted.
As the decade began the Energy Information Administration at the U.S. Department of Energy forecast domestic oil production would increase at an annual basis of 234,000 barrels per day (bpd) from 2011 through 2019 reaching 7.5 million bpd.
“The growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations,” EIA stated.
U.S. crude oil production reached 7.5 million bpd in July 2013 and surpassed 9 million bpd in 2015, 10 and 11 million bpd in 2018 and 12 million bpd in 2019.
The U.S. became the world’s largest oil producer surpassing Saudi Arabia this year.
EIA forecast net imports of petroleum would decline both in absolute terms and as a share of total U.S. energy consumption. The decline in energy imports reflects increased domestic petroleum and natural gas production, increased use of biofuels, and lower demand resulting from rising energy prices and the adoption of new efficiency standards for vehicles.
As it turned out imports of petroleum declined until exports finally exceeded imports and the United States became a net exporter in September of this year.
The global unconventional shale boom is arguably one of the biggest technology breakthrough in decades, and it has had enormous economic and political ramifications worldwide, according to a study by the Securities Research Department with the Credit Suisse Research Institute.
“What started in a field in Texas has turned into a worldwide phenomenon, with ramifications spreading across a wide range of countries, commodities and industries,” the report stated in 2013.
The international financial firm of UBS also believed that huge changes were happening. “The American energy extraction techniques of horizontal drilling and hydraulic fracturing – combine with a structurally high relative price of crude oil – has encouraged widespread development of America’s energy resources,” the report entitled North American Energy Independence: Reenergized stated.
Prices were very strong as the decade began in January 2010, reaching $100 per barrel in February 2011 and peaking at $113 in May. Prices began to drop and leveled off at $80 in 2012, but rose again in 2013 and 2014. After peaking at $107 during the summer of 2014, prices began to fall again to $80 in October to $70 in November to $50 in December and $40 in January 2015. Throughout 2015 prices meandered in the $40-$50 ranges but decline again bottoming out at $26 in January 2016.
Oil prices made a comeback and peaked in October 2018 at $75. Today, U.S. oil markets are still soft because of an oversupply and prices are in the $50-$60 range.
Even though prices have been on a roller-coaster ride, oil and gas has production has steadily increased and Texas has led the way. In October 2010, Texas produced 1.1 million bpd of oil. In October 2019, production increased to 5.3 million b/d.
Natural gas production surged about 50 percent from 19.15 million mcf per day in October 2010 to 29.83 in October 2019.
As the industry enters the next decade, many expect U.S. oil production to be steady, but prices will be volatile with many ups and downs.
Alex Mills is the former President of the Texas Alliance of Energy Producers.