U.S. is World's Largest Oil Producer

U.S. Oil Production

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.

BP's Bob Dudley Shares His Energy Thoughts - IHS CERAWeek

BP's Bob Dudley addressed the crowd at IHS CERAWeek to share the company's view of the industry industry. Mr. Dudley described the global energy journey and his view of the role of the US & Russia in the energy future. [ic-l]The global energy journey includes demand growth that is driven by Asian countries through 2030. Non-fossil fuels that will account for 1/5th of energy in 2030 and global oil demand is expected to rise by 16 mmbbls/d. The projected increase in oil demand is more than Canada, Russia, and the UAE produced in 2011.

Mr. Dudley stated "Turning to supply, many in the industry used to worry about whether demand on this scale could be met......but there hasn't been much talk of "peak oil" lately."

Shale and deepwater plays have driven oil and gas production higher to a point where we believe we have 54 years of proved oil reserves and 64 years of proved gas reserves.

“North Dakota is only second to Texas in terms of production and has surpassed OPEC member Ecuador over the past few months.”

Russia and the US are two energy giants who are driving supply. The US produced 5 mmbbl/d in 2008 and has recently eclipsed 7 mmbbls/d. The deepwater accounts for 18% of US daily production and plays like the Bakken and Eagle Ford has supported onshore production. Along with growing production, the country's import dependency is declining significantly.

Oilfield jobs are open across South Texas and much of the US. High paying oil and gas jobs have helped pull the economy out of the recession. BP is now positioning itself to invest significantly in downstream expansions. The Whiting refinery is expadning to handle growing volumes of Canadian crude. The expansion will be the largest economic investment in the history of Indiana. That will be followed by a $400 million reformer that is being added to the company's Toledo Refinery.

Mr Dudley ended his speech noting that recoverable reserves have grown considerably over the decades:

"...the world's energy companies have produced more oil in the last 40 years than was thought to exist on the entire globe in 1979."

You can follow @EagleFord_Shale on twitter for live updates from the conference.

Exxon - Rosneft Trade Artic Oil for Eagle Ford Interest?

ExxonMobil agrees to enter a partnership with the Russian oil & gas giant Rosneft in the Artic and Black Sea in exchange for a development carry and the potential to participate in Exxon's tight oil assets in Texas. Is it the Eagle Ford? Exxon has been tight lipped when it comes to the Eagle Ford and this might be the first indication that the company has a material position in the play. XTO was leasing in South Texas when the company was acquired by Exxon in 2010. XTO had built a significant producing position through the acquisition of Dominino Resource's South Texas properties not long before it was acquired itself. The assets were largely producing and acreage was held by production. That luxury is likely the reason we have not seen Exxon add as many rigs in South Texas as other operators. I'll update this post as more details emerge.

The agreement, signed by Rosneft President Eduard Khudainatov and ExxonMobil Development Company President Neil Duffin in the presence of Russian Prime Minister Vladimir Putin, includes approximately US $3.2 billion to be spent funding exploration of East Prinovozemelskiy Blocks 1, 2 and 3 in the Kara Sea and the Tuapse License Block in the Black Sea, which are among the most promising and least explored offshore areas globally, with high potential for liquids and gas.

In the course of these projects, the companies will use global best practices to develop state-of-the-art safety and environmental protection systems.

The agreement also provides Rosneft with an opportunity to gain equity interest in a number of ExxonMobil’s exploration opportunities in North America, including deep-water Gulf of Mexico and tight oil fields in Texas (USA), as well as additional opportunities in other countries. The companies have also agreed to conduct a joint study of developing tight oil resources in Western Siberia.