America's Oil Boom is All about Texas
The media has been focused on North Dakota as “A Modern-Day Gold Rush,” but the U.S. Energy Information Administration (EIA) just published a report that over half of America’s oil boom is all about Texas. Over the last six years, North Dakota’s production did grow by a stunning 600% and allowed the state to become America’s second largest state producer, but that growth was from a very low starting base. It is Texas that is leading the boom by doubling its already large production level to become even more dominant today.
America oil production since 2008 is up by about 60% to 7.4 million barrels a day, equal to 2.7 billion barrels a year. Texas, North Dakota, California, Alaska, Oklahoma, and the Gulf of Mexico currently supply 6 million, 80%, of those barrels per day of crude oil. But Texas alone now provided almost 35%, according the EIA’s 2013 March Petroleum Supply Monthly. North Dakota was second with 12% of U.S. crude oil production, followed by California and Alaska at close to 7% each and Oklahoma at 4%. The federal offshore oil field in the Gulf of Mexico also produced 17%.
In 2013, total U.S. crude oil production grew by 15% to 7.4 million barrels per day as fracking of underground shale formation in the Eagle Ford field of Texas and Bakken in North Dakota allowed both of those states to grow production by 29% for the year. In three years, output grew in North Dakota's by 177% and in Texas's by 119%.
Fracking success spread to three traditionally minor energy producing states since 2010: 1) Colorado production grew by 93% due to development of the Niobrara Shalefield, 2) Oklahoma production grew by 62% due to development of the Woodford Shale field, 3) New Mexico production grew by 51% due to development of the its share of the Permian Basin.
America now produces crude oil in 31 states and two offshore federal regions -- the Gulf of Mexico and the Pacific Coast. Of those 33 producing areas, 10 supply more than 90% of U.S. output. While 9 of those top 10 areas were also among the top 10 producers five years ago, their relative contributions have changed.The most significant change is North Dakota, which has risen from the 7th largest oil producer to the 3rd.
The big disappointment in America’s energy boom are the Gulf of Mexico, Alaska, and California, which together in 2008 supplied nearly half of U.S. crude production mainly from conventional oil reservoirs, now provide less than 1/3 of output in 2013. Although each of these locations has the upside potential to more than double production, political forces have frustrated development.
As the EIA report demonstrates, the growth of oil production is accelerating in America. As the oil boom spreads to more states, the benefits for employment and commerce are becoming apparent to most Americans. This realization will increasingly build a political consensus in America in favor of energy development that can keep expanding the boom expanding for a decade.
The author welcomes feedback @ chriss@chrissstreetandcompany.com
Chriss Street is teaching microeconomics at University of California, Irvine this spring from March 31 – June 8, 2014. Call Student Services at (949) 824-5414 or visit http://unex.uci.edu/courses to enroll!