The Department of Energy reported today that US oil production for the week ending August 9 averaged 7.57 million barrels per day (bpd), which is the highest output of US crude oil in any week since the last week of November 1989, almost 24 years ago (see chart above). US oil production during the first week of August was higher than the same week a year ago by 22.5%.
Amazingly, in just the last two years oil production in “Saudi America” has increased by more than 2 million bpd (and by 36.2%), from 5.56 million bpd during the first week of August in 2011 to 7.57 million bpd last week, and has completely reversed a multi-decade decline in US oil output (see chart). It took more than 20 years for US oil output to gradually decline by 2 million bpd between 1989 and 2011, and then only 24 months to completely reverse that multi-decade decline with a 2 million bpd increase in oil output between August 2011 and August 2013.
With a continuation of the current, double-digit percentage increases in domestic crude oil production, it’s very likely that US oil output will exceed 8 million bpd by early next year (for the first time since the fall of 1988), and could possibly surpass 9 million bpd by the end of next year (for the first time since early 1986). Those estimates are consistent with the Department of Energy’s most recent upwardly revised forecast that US crude oil production will average 8.2 million bpd in 2014.
Bottom Line: As I reported last week, a 2 million bpd increase in US oil output in only 24 months to the highest level in nearly a quarter century, as a direct result of the dramatic increases in shale oil production made possible by the revolutionary, breakthrough drilling technologies of fracking and horizontal drilling, is an important energy milestone and has to be one of the most remarkable success stories in the history of US energy production. To put a 2 million barrel per day increase in US oil production into perspective, that would be like adding the entire daily oil output of Brazil (2 million bpd in 2012) to the US oil supply, and almost as much as adding the entire output of Venezuela (2.3 million bpd in 2012) to the US oil supply. That’s pretty amazing — thanks to advances in drilling technologies, it’s as if we’ve discovered all of Brazil’s vast energy resources right here in America, in places like North Dakota, Oklahoma, New Mexico, and Texas. Welcome to America’s shale revolution.