Recently, some articles have appeared that referred to a news release by the Energy Information Administration (EIA) to the effect that in a few years the U.S. will surpass Saudi Arabia and Russia as the world’s largest crude oil producer. This is totally untrue. The EIA spokesman included the production of natural gas liquids (NGL), also largely produced from tight shale formations, with crude oil to arrive at his forecast. This is not a legitimate way to look at a crude oil forecast since NGL’s cannot be substituted for crude oil to make gasoline, jet fuel, diesel fuel, and heating oil.
It is true that domestic crude oil production has been increasing at a rapid clip, largely as a result of hydraulic fracturing (“fracking”) of tight formations in different parts of the U.S., notably in North Dakota and Texas. This has dramatically reversed the year-to-year decline in oil production and has resulted in decreasing oil imports, a very favorable trend in many respects, including an improvement in our balance of payments to other countries from whom we buy oil.
Looking at the actual EIA forecast, published recently, we can see that tight oil production is projected to rise from almost nothing in 2000 to a peak around 2020 when our total crude oil supply from all sources will be around 7.5 million barrels per day – about the same figure as in 1990. That, of course, would be a huge achievement, saving hundreds of billions of dollars in oil imports. Saudi Arabia and Russia produce around 10 miilion barrels of oil per day and will continue to do so for some time to come. The figure below is taken from the recent EIA forecast.