The Department of Energy (DOE) is forecasting that US oil output will increase this year by 14% to an average of 7.3 million barrels per day (bpd), up from last year’s average of 6.4 million bpd. In 2014, the DOE projects another annual 8.2% increase to an average of almost 8 million bpd, which would bring production by the end of 2014 to 8.5 million bpd, the highest monthly level of domestic crude oil output since 1986.
The surge in domestic oil production to 8.5 million bpd within the next few years will be a phenomenal turnaround in America’s oil production, in an amazingly short period of time. Consider that it took more than 20 years for America’s oil production to gradually decline from 8.5 million bpd in 1986 to about 5 million bpd in 2008, representing a 41% drop in output over a 22-year period. But thanks to hydraulic fracturing and horizontal drilling accessing America’s oceans of shale oil, the multi-decade decline in domestic oil production will be completely reversed in only six years, as US output goes from 5 million bpd in 2008 to 8.5 million bpd by 2014.
As I mentioned in a blog post yesterday, this phenomenal energy success story is not part of any intentional government policy favoring domestic oil production; rather it’s a success story of private enterprise, private investment, and advances in drilling technology that have accessed shale oil, mostly on private lands.
Update: Considering that oil output has increased by 52% in North Dakota over the last year, and by 32% in Texas, the Department of Energy’s forecast of a 14% increase this year in domestic oil output might be rather conservative. And I’m not sure that the Department of Energy is incorporating recent developments in West Texas oil in its forecasts, but that’s where we might see the next surge in domestic shale oil and gas production. In fact, the shale possibilities in West Texas are so promising that some are predicting it will be the “Eagle Ford Shale on steroids.” Peak what?