Olympics Day 13 - Women's Football Final - Match 26 - USA v Japan

The United States is expected to produce more hydrocarbons – oil, natural gas, and liquids (such as condensates) – than any other country in the world this year, according to the US Energy Information Administration.

The EIA published an article last Friday on US hydrocarbon production growth, comparing it to that of global oil and gas powerhouses Saudi Arabia and Russia. US petroleum and natural gas production has risen by 10 quadrillion Btu – with growth split 70-30 between oil and gas respectively – since 2008. By comparison, both Russian and Saudi hydrocarbon production rose by just 1 quadrillion Btu [British thermal units] in the last five years.

“Total petroleum and natural gas hydrocarbon production estimates for the United States and Russia for 2011 and 2012 were roughly equivalent—within 1 quadrillion Btu of one another. In 2013, however, the production estimates widen out, with the United States expected to outproduce Russia by 5 quadrillion Btu.,” said the EIA.

If there are 6 million Btu in a barrel of oil and 1,023 Btu in a cubic foot of natural gas, a quadrillion Btu is about 167 MM barrels of oil (458,000 bbl/d) or 978 billion cubic feet of natural gas (2.7 bcf/d).

Let’s Put This Into Context

The US has been one of the world’s top three oil producers for more than a decade, and became the world’s largest natural gas producer in 2009, when it surpassed Russia, according to the BP Statistical Review of Energy. Leaving natural gas production aside, International Energy Agency projections for US oil output suggest that it will overtake Saudi in crude output later in this decade, though it  is unlikely to sustain its oil production primacy indefinitely.

Projections are an inexact science. The world has seen its share of energy upsets of late. Countries like Libya and Iran, traditionally big oil producers, have experienced large output declines, owing largely to geopolitical factors. The US’ relatively recent surge in production came as a shock, enough so that billions has been spent on infrastructure to accommodate a surge in natural gas imports, much of which now sits idle. If Russia truly has a bigger, better Bakken in Western Siberia, and ExxonMobil and Rosneft are bringing all their resources to bear to get it out of the ground, who is to say what global production trends will look like three, five or ten years from now?

The EIA has acknowledged that it is not necessarily straightforward to compare hydrocarbon production across countries. Crude oil, condensates and natural gas are not only different from each other in both properties and energy content. There are also large variations within those categories. Oil produced from Canada’s oil sands is not the same as conventional oil production from Kuwait.

“Differences in energy content of crude oil, condensates, and natural gas produced throughout these countries make accurate conversions difficult,” the EIA said. “There are also questions regarding the inclusion of biofuels and refinery gain in the calculations.” Refinery gain refers to the difference in volume between the amount of crude oil fed into a refinery and the total combined volume of products – gasoline, diesel, kerosene, etc – that comes out of it. A 42-gallon barrel of crude oil yields 44.6 gallons of refined products, according to the State of Texas.

And lest we forget the question of energy independence, if US oil production peaks at 11.1 million barrels per day in 2020, as projected by the IEA, that would still fall short of consumption unless demand falls off dramatically from last year’s 18.55 million bbl/d.