U.S. Crude Output Surpasses Old Record, 17% Growth In 2018

Annual U.S. crude oil production reached a record level of 10.96 MMbbld in 2018, 1.6 MMbbld, or 17%, higher than 2017 levels, reports the Energy Information Administration (EIA). In December 2018, output reached 11.96 MMbbld, the highest monthly level in U.S. history. U.S. crude production has increased significantly over the past decade, driven mainly by output from tight rock formations using horizontal drilling and hydraulic fracturing. EIA projects that U.S. production will continue to grow in 2019 and 2020, averaging 12.3 MMbbld this year and 13 MMbbld next year.

Texas produces more crude oil than any other state or region, making up 40% of the national total in 2018. Texas has held the top position in nearly every year since 1970, with the brief exception of 1988 when Alaska produced more and from 1999 to 2011, when output from the Federal Gulf of Mexico region was greater.

Texas crude oil production averaged 4.4 MMbbld last year and reached a record-high monthly level of 4.9 MMbbld in December. The state’s 2018 annual production increase of nearly 950,000 bbld, driven by significant growth in the Permian region in West Texas, was nearly 60% of the total increase.

Several other states or regions set production records last year. Growth in the Permian region, which spans parts of Texas and New Mexico, also drove a 215,000-bbld, or 45%, output increase in New Mexico. This level was the second-largest state-level upswing in 2018 and accounted for 13% of the total U.S. increase, setting a new annual record production level for New Mexico.

In the Federal Gulf of Mexico, new projects and expansions that have launched since 2016 contributed to the growth in production in 2018. Oil and natural gas producers brought online 11 new projects last year, and eight more are expected to commence operations this year.

The Federal Gulf of Mexico’s crude oil output grew by 61,000 bbld, leading to its highest annual average of 1.74 MMbbld. The Federal Gulf was the second-largest producing region in 2018.

Production levels in Colorado, Oklahoma, and North Dakota each grew by more than 95,000 bbld from 2017 to 2018. In Colorado and North Dakota, this increase was enough to set new record output for the year. Production increases in Colorado were driven by the Niobrara shale formation, while continued production in the Bakken region drove increases in North Dakota. Oklahoma’s crude oil production has yet to surpass its record of 632,000 bbld set in 1967.

Increases in these states and regions were enough to offset production declines elsewhere. Alaskan output decreased by 16,000 bbld and California’s fell by 13,000 bbld. It was California’s fourth consecutive annual decline.

(SOURCE: The Weekly Propane Newsletter, April 29, 2019)