The U.S.' crude oil production saw a massive growth of 119% over the past decade to recently take the top prize as the world's biggest crude producer, according to data compiled by Anadolu Agency based on statistics from the U.S.' Energy Information Administration (EIA).
Since the shale revolution kicked off in 2008, the U.S. managed to raise its crude oil output from 5 million barrels per day (mbpd) in 2008 to 10.96 mbpd ten years later, surpassing oil producing majors like Saudi Arabia and Russia in terms of output volumes.
Nonetheless, economic and geopolitical whirlwinds like the global financial crisis, war on terror, and invasion of Iraq put the U.S. in a difficult position in 2008 when the country saw its domestic crude oil production plunge to a six-decade low.
Crude production averaged 5 mbpd in 2008 -- its lowest level since 1946, according to EIA data.
However, the shale revolution introduced new techniques to the American oil industry, including hydraulic fracturing and horizontal drilling, which paved the way for an unprecedented increase in the U.S.' domestic crude production.
Following this shale production, crude output in the country rose steadily to an annual average of 5.48 mbpd in 2010, 6.5 mbpd in 2012, 7.47 mbpd in 2013, 8.76 mbpd in 2014, and then 9.43 mbpd in 2015, according to EIA data.
- Oil price crisis recovery
When oil prices begun their historic dive in June 2014, the U.S.' crude output totalled 8.72 mbpd.
Due to low global oil demand and the glut of supply rising in the oil market, the price of international benchmark Brent oil plummeted from $115 per barrel in June 2014 to below $30 per barrel in January 2016.
Since the American oil industry had a relatively higher breakeven price compared to other major producers, such as Russia and Middle Eastern countries, it was much harder for their survival in the face of declining prices.
From 2015 through 2016, the American oil sector witnessed around 300 companies declaring bankruptcy, approximately 250,000 job losses and more than $250 billion in erased capital.
For survival, U.S. oil firms refrained from expensive projects like deep-water exploration, and instead focused on more cost-effective and efficient projects.
Drilling and exploration in the U.S.' Gulf of Mexico were shelved until prices recovered. Instead, U.S. firms focused more on lower costs projects, such as in the Permian, Bakken and Niobrara onshore shale basins.
In addition to cost-cutting, the adoption of other innovations like the latest developments in information technology, data gathering, artificial intelligence and cloud computing began, which was later dubbed to as 'Shale 2.0.'
- Shale helps U.S. break crude output records
During the oil price crisis, the U.S. oil industry managed to lower its average breakeven price from $65-$75 per barrel to $45-$55 a barrel. Adapting to this low price environment allowed the U.S. gain a competitive edge and hold onto its spot on the global market.
Crude oil output averaged 8.83 mbpd in 2016 due to the oil price crisis, but recovered to 9.35 mbpd in 2017.
The year 2018 was a record breaking period for the American oil industry.
In 2018, crude oil production surpassed the previous record set back in 1970 with 9.64 mbpd, and climbed to 10.96 mbpd. To put this into context, this was 1.6 mbpd, or 17%, higher than the annual average level in 2017, the EIA data showed.
- U.S. takes top crude producer spot
On a monthly average basis, the U.S.' crude oil production also managed to overtake two of the world's largest crude producers in late 2018.
In October 2018, U.S. crude output reached 11.2 mbpd, unseating Saudi Arabia as the largest producer globally.
In November 2018, U.S. crude oil output rose to 11.7 mbpd, surpassing Russia, and the country became the world's largest crude producer.
The U.S.' crude oil production is expected to increase further, to average 12.4 mbpd in 2019 and 13.1 mbpd in 2020, according to the EIA's Short-Term Energy Outlook report for April 2019.
- Permian in Texas
Rich with oil and gas resources and close to the business heartland of the American oil industry, the Permian basin deserves special recognition in the U.S. shale revolution.
This region, located between western Texas and eastern New Mexico, accounted for nearly 60% of the total oil production increase in the U.S. from 2017 to 2018, according to the EIA.
The U.S. state of Texas saw an annual oil production increase of 950,000 bpd in 2018 to reach almost 4 mbpd, driven by massive growth the Permian region.
Production in the Permian is expected to double in the next five years, according to projections from Citigroup, who estimate that output from the region will reach 8 mbpd by 2023, as the basin can operate at breakeven levels as low as $30 to $40 per barrel.
Among all U.S. states, Texas continues to produce more crude oil than any other state or region in the U.S., producing 40% of national oil in 2018, according to the EIA.
'Texas has held the top position in nearly every year since 1970, with the brief exception of 1988, when Alaska produced more crude oil than Texas, and from 1999 through 2011, when production from the Federal Offshore Gulf of Mexico region was higher, the EIA statement said.
Crude oil production in the state of Texas averaged 4.4 mbpd last year, and reached a monthly record high level of 4.9 mbpd in December 2018, it said.
Thanks to the Permian, New Mexico also saw its oil output in 2018 increase by 215,000 bpd, or 45%, from the previous year, according to the EIA.
- Other regions
The U.S.' Gulf of Mexico was the second largest oil producing region in the U.S. last year. Crude oil production in this region grew by 61,000 bpd in 2018, from the year before, and recorded its highest annual average of 1.74 mbpd, the EIA data showed.
Oil production levels in the U.S. states of Colorado, Oklahoma, and North Dakota each grew by more than 95,000 bpd from 2017 to 2018, as Colorado and North Dakota saw new record oil production levels last year.
However, Oklahoma’s crude oil production has yet to surpass its record level of 632,000 bpd that was set in 1967, according to the EIA.
'Production increases in Colorado were driven by the Niobrara shale formation, while continued production in the Bakken region drove increases in North Dakota,' the EIA said.
Oil output increases in those U.S. regions were enough to offset oil production declines in other American states.
Last year, the state of Alaska saw its oil production decrease by 16,000 bpd. Oil output in the state of California production declined by 13,000 bpd, marking the fourth consecutive annual decline for the state.
By Ovunc Kutlu