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Spokane, Washington  Est. May 19, 1883

Texas, North Dakota lead U.S. oil boom

Domestic production at highest level in 20 years

Sean Cockerham McClatchy-Tribune

WASHINGTON – U.S. oil production has soared to heights not seen in 20 years, largely driven by an explosion in crude harvested from Texas shale rock.

America is producing more than 7 million barrels of oil a day, the highest volume since 1992, according to figures released Thursday by the U.S. Energy Information Administration. It’s another sign of the transformation of American energy, as the nation is forecast to overtake Saudi Arabia as the world’s top oil producer in just a few years.

Texas and North Dakota are the dominant states behind the increase in oil production, with crude from the Bakken formation of North Dakota transforming that state and allowing it to pass Alaska as the nation’s second leading oil producer.

Texas, meanwhile, has doubled its crude production since January 2010 and is by far the U.S. oil king.

Its boom is mostly because of the Eagle Ford shale region in south Texas, said Philip Budzik, an analyst with the Energy Information Administration. The energy revolution there and in North Dakota is a result of horizontal drilling techniques and hydraulic fracturing, in which high-pressure water and chemicals are injected underground to free up pockets of oil in shale rock.

Mark Perry, an economics professor at the University of Michigan-Flint and a visiting scholar at the conservative American Enterprise Institute think tank, said Texas has become “Saudi Texas.”

“It’s kind of mind-boggling how big the increase is and how fast it’s happened,” Perry said in an interview.

Texas now produces almost three times as much crude oil as the second-place state, North Dakota. Texas alone has accounted for nearly a third of U.S. oil output in the past six months, according to Perry. If Texas were a separate country, he said, it would rank above oil-rich Norway as the 14th largest oil-producing nation in the world.

Along with the booming south Texas Eagle Ford region, which just five years ago produced little oil, the Permian Basin in West Texas is seeing a drilling resurgence as oil is extracted from its shale rock.

The unlocking of such oil reserves from shale rock is a major reason the International Energy Agency forecasts the United States will become the world’s leading oil producer by about 2017. The agency figures America will become a net oil exporter by 2030, a huge shift in which the nation moves away from its dependence on foreign oil.

But U.S. Energy Information Administration analyst Budzik cautioned there are a lot of variables in the forecasts.

That includes oil prices, what areas prove to be the most profitable, and how long a well drilled through hydraulic fracturing will continue to produce.

“We are expecting oil production to increase, but there’s always a lot of uncertainty about the future,” he said.

Hydraulic fracturing, known as fracking, also has fierce critics who fear groundwater pollution.

Another question is what the increased drilling will mean for gasoline prices. Oil prices are set on the world market, so more American drilling doesn’t necessarily lower the price of a barrel of crude.

Gasoline prices have been rising even as American drilling soars and the nation produces more than half the oil it consumes. Speculators and refinery closures are cited as among the reasons.

Perry said he believes the boom in American drilling will gradually lower gasoline prices. But growth in demand for oil in places like China, India and South America could work to keep prices up.

“It will be an interesting interaction between increasing supply in the U.S. and increasing global demand. We’ll see how that all plays out over the next couple of years in terms of oil prices,” he said.