US production of oil and natural gas liquids from shale rock formations shows promise, but do not mean an end for American exposure to global oil markets.
“We are going to be a net importer for a long time,” Energy Information Administration deputy administrator Howard Gruenspecht told Breaking Energy on the sidelines of the US Association for Energy Economics Conference (USAEE) in Washington, DC this week.
A dramatic increase in US natural gas production from unconventional onshore formations, like shales, has oversupplied the domestic natural gas market and broken the a longstanding link between the US gas price and the global price for crude oil.
Oil production from US unconventional onshore formations has also begun to increase, and will likely continue to rise, but not to levels that offset US import requirements.
Dakota Drilling A Drop In The Barrel
Gruenspecht noted that one of the headline onshore US oil plays, the Bakken Shale, has driven a sharp rise in oil production in North Dakota, to over 400,000 barrels per day in recent months from less than 100,000 barrels per day in 2005. By comparison, the US imported nearly 12 million barrels per day of crude oil and petroleum products in 2011, according to Energy Information Administration data.
While US unconventional onshore oil production is credited with contributing to a recent increase in domestic oil production, “we’re still very tied into the world market, so we’re not having anything like the separation in some sense that we’ve experienced with natural gas”, Gruenspecht said.
The EIA noted in an energy brief that US dependence on oil imports had fallen “dramatically” since 2005, from 60.3% to 49.2% in 2010. The agency attributed part of this reduction is attributable to higher domestic production, but said other factors included a decline in consumption, efficiency enhancements, and increasing biofuels production.
US production of crude oil and liquids averaged 7.72 million barrels per day in January-July 2011, according to the EIA.
For full Breaking Energy coverage of the USAEE conference this week in Washington, DC, click here.