Texas Outranks OPEC Nations

State Tops World in Natural Gas Production
Texas Leads in Natural Gas

Texas Leads in Natural Gas | click to enlarge

The latest figures from the American Petroleum Institute (API) reveal that many individual states now outstrip whole countries when it comes to natural gas production. And, not surprisingly, Texas is on top.

Related: OPEC Not Likely to Stop Shale Boom

Texas leads the world by producing 18.81 billion cubic feet of natural gas per day, more than more than any member of OPEC. Louisiana, Pennsylvania, Wyoming, Oklahoma and Colorado all rank among the top 20 energy-producing nations in the world.

The Lone Star State also leads in crude oil production and is ranked 8th in overall global production. The Eagle Ford Shale alone accounts for more than 1.5-million barrels of crude oil per day.

“This is what energy security looks like,” Tracee Bentley, head of the Colorado Petroleum Council, said. “Thanks to innovations in hydraulic fracturing and horizontal drilling, Colorado now outpaces seven of 12 OPEC nations in natural gas production.”

OPEC’s announcement last Friday that it will stick with its policy to produce oil at a high rate, has not intimidated American shale producers.

Related: OPEC Decision Doesn’t Intimidate


EIA: Texas is Largest Producer of Shale Natural Gas

Shale Gas Production Increased from 3 bcf/d - 11 bc/d from 2007 - 2013 in Texas
Gross Withdrawls from Shale Gas Wells

Gross Withdrawls from Shale Gas Wells|Click to Enlarge

Texas is the largest producer of shale natural gas, according to a report from the Energy Information Administration (EIA). From 2007 to 2013, shale gas production in Texas increased from 3 bcf/d to 11 bcf/d, with the majority of the shale gas produced coming from the Barnett, Eagle Ford, and Haynesville Shale formations.

In 2013, total natural gas gross withdrawals* in the U.S. hit 82 bcf/d, with shale gas wells becoming the largest source of natural gas production. According to the Natural Gas Annual, gross withdrawals from shale gas wells surpassed production from non-shale gas wells after volumes increased from 5 Bcf/d in 2007 to 33 Bcf/d in 2013, representing 40% of total natural gas production.

Natural gas prices have averaged ~$2.00 – ~$4.00 per mmbtu since 2011, which is a far cry from peak prices of nearly $13.00 per mmbtu during the Summer of 2008. New technology is enabling producers to shift focus to resources that are easier to reach and at lower costs, which is reflective of the lower commodity prices.

In 2007, shale well gas comprised only 8% of total U.S. production levels. The distribution across the nation since then, however, has changed significantly in areas such as Texas, Pennsylvania, Louisiana, and Arkansas. These states accounted for 79% of shale gas production in the U.S., or about 26 bcf/d.

Natural gas gross withdrawals – a measure of full well stream production including all natural gas liquids and non-hydrocarbon gases after oil, light liquid hydrocarbons, and water have been removed from the product.

U.S. is World’s Largest Oil Producer

Texas Contributes More than 1/4 of Total U.S. Crude Production
U.S. Oil Production

U.S. Oil Production | Click to Enlarge

The U.S. is now the world’s largest producer of oil, surpassing Russia and Saudi Arabia, according to Bank of America Corp. (BAC), as reported in Bloomberg.

U.S. crude oil output in the first quarter surpassed 11-million b/d, which was the highest volume produced by the country in 24 years. The U.S. is expected to hold the top spot through the end of the year, BAC officials said.

Most of that production is coming from Texas and North Dakota, which produced nearly half (48%) of all U.S. oil in April of 2014, according to the Energy Information Administration (EIA). Texas alone produced nearly 3-million b/d in the same month, thanks largely to the Eagle Ford Shale, reaching production levels not seen since the 70s.

Read more: Texas Oil Production Reaches Levels Not Seen Since the 70s

According to the International Energy Agency (IEA), U.S. oil output will increase to 13.1 million b/d in 2019 and plateau. Most analysts agree the Eagle Ford and Bakken Shale plays, which are largely responsible for production in Texas and North Dakota, will peak around this time, and begin to decline.

Oil Inventories Stacking Up

With the glut of oil being produced in the U.S., crude inventories on the U.S. Gulf Coast (USGC) have recently climbed to record levels according to the EIA, hitting 207.2 million bbl on April 11, 2014. The EIA says the USGC region has about 275 million bbls of current capacity, but more midstream projects pushing oil to the USGC have been scheduled.

To accommodate the influx of oil into the region, several crude oil storage projects are expected along the USGC through 2016. Recently, Haddington Ventures LLC, a midstream oil and gas investment firm, was identified in a Wall Street Journal (WSJ) blog as the designer/builder for a major crude oil storage project in Houston, TX.

Read more: Crude Supply Creates Demand for Storage Projects on USGC

Overall, the challenges that have come and will continue to come with the oil & gas renaissance in the U.S. seem to be outweighing most of the negative impacts. Namely, U.S. energy independence is the most favorable outcome, with tensions growing in Russia and unrest in the Middle East. The EIA predicts the U.S. will be energy independent by 2035.