Not very long ago, the U.S. imported vast amounts of oil from all over the world. Most of it came from countries that were a member of the Organization of Petroleum Exporting Countries and some were not very friendly to the U.S.
Just 10 years ago, the U.S. imported 14 million barrels of oil per day, and produced only 5 million b/d, according to the Energy Information Administration at the Department of Energy.
In March 2019, the U.S. oil imports dropped to 9 million b/d and production rose to 12 million b/d.
This remarkable turnaround has strengthened the nation’s economic position around the world and reduced significantly our vulnerability to countries that might threaten to use the “oil weapon” against the U.S. as used previously.
How did this happen?
Some believe good old American ingenuity was a key factor. Some also attribute it to private enterprise driven by a capitalist system, which often rewards the successes of risk takers.
It started with the use of drilling technology allowing wells to be drilled thousands of feet into the earth and thousands of feet laterally into shale formations bearing enormous amount of hydrocarbon. The shale rock is designated tight formation, and hydraulic fracturing techniques were developed to get the natural gas to flow into the wellbore.
It was risky and expensive, but tests finally yielded success in several wells in the Barnett Shale north of Fort Worth. Once the word got out the rush was on.
Someone then asked: If we can get natural gas from shale, why not oil, too?
It took time and money, but it didn’t take very long until oil production began to climb.
The overall energy picture in the U.S. has changed significantly during the last 10 years with crude oil and natural gas gaining, but coal and nuclear declining. Oil had the largest increase in production going from 5 million b/d in 2008 to 12.3 million b/d in March. Natural gas production rose from a monthly average of 21,112,953 million cubic feet in 2008 to 32,735,074 million cubic feet (53 percent) in March. Coal production declined 34 percent during the last 10 years. Natural gas and coal are primary competitors as electric-generation fuels.
Renewables (hydro, wind, solar) rose 62 percent since 2008, but only represents 12 percent of total U.S. energy production. Nuclear has declined from 11 percent of total energy production in 2008 to 8 percent in 2018.
U.S. imports of crude oil from members of the Organization of the Petroleum Exporting Countries (OPEC) in March 2019 totaled 1.5 million barrels per day (b/d), their lowest level since March 1986, based on data in EIA’s Petroleum Supply Monthly.
“U.S. crude oil imports from OPEC members have generally fallen over the previous decade as domestic crude oil production has increased,” EIA stated. “From the early 1980s through the late 2000s, OPEC member countries were the source of about half of all U.S. crude oil imports. In the past decade, however, total U.S. crude oil imports have fallen and OPEC’s share of those imports has decreased. Non-OPEC countries such as Canada, Mexico, Brazil, and Colombia have made up larger shares of U.S. crude oil imports. In each of the past four years, Canada alone has supplied more crude oil to the United States than all OPEC members combined.”
EIA stated the decline in crude oil imports coupled with the rise in oil exports has resulted in the U.S. becoming a “net exporter of crude oil in every month from November 2018 through March 2019. More than 90 percent of the U.S. crude oil exported since the start of 2018 has been shipped from Gulf Coast ports.”
President Trump has called the reversal an “energy renaissance.” It certainly has changed the energy picture in the U.S. and around the world in a little over 10 years.
Alex Mills is the former President of the Texas Alliance of Energy Producers.