Energy
3:58 pm
Wed October 24, 2012

Could U.S. Produce Enough Oil To Rival Saudi Arabia?

Originally published on Thu October 25, 2012 12:21 pm

An oil boom is under way in the United States. Since 2008 domestic oil production has increased dramatically, reversing what was a nearly three-decade decline. That has some predicting the U.S. could overtake Saudi Arabia as the world's largest petroleum producer in coming years.

In 2011 the U.S. produced 5.66 million barrels of crude oil a day, according to the Department of Energy's Energy Information Administration. By next year the agency projects that will increase 21 percent to 6.85 million barrels a day. Add in things like natural gas liquids, biofuels and processing gains at refineries and that number increases.

"By 2013, we'll probably be a little over 11 million barrels a day," says EIA administrator Adam Sieminski. "That puts you pretty close to Saudi Arabia's" production of more than 11 million barrels a day, he says.

Saudi Arabia could increase production from its vast reserves. But just the prospect of approaching Saudi Arabia's production pleases those in the U.S. oil industry.

"It's very exciting," says Rayola Dougher, senior economic adviser for the American Petroleum Institute. "We spend a lot on importing crude from around the world that we may not have to in years ahead."

Much of the new oil produced in the U.S. is by unconventional means — such as hydraulic fracturing, or fracking. That involves pumping huge amounts of water underground along with sand and some chemicals. The pressure breaks up shale formations and releases oil.

The research company IHS released a report this week that shows unconventional oil and natural gas production supports 1.7 million jobs. The report projects that number will increase to 3 million jobs by 2020.

"It's about blue-collar jobs. These are good jobs. The average wage for these jobs is about $35 an hour," says John Larson, IHS vice president for public sector consulting.

The new positions are in places like North Dakota, which is now the No. 2 producer of oil in the U.S. behind Texas. And the industry anticipates big expansion.

"Ohio, for example, they have great potential to be a major oil producer in the United States," Dougher says. She also points to promising shale plays in Texas, Louisiana, Alabama and Tennessee.

But new technologies can carry new risks. Some worry hydraulic fracturing may pollute groundwater. Others warn there are potential problems in exploring for oil on new frontiers.

"Oil companies want to open up areas off the northern coast of Alaska in the Arctic Ocean, where they're not prepared to address a major oil blowout or spill like we had in the Gulf of Mexico," says Daniel Weiss, director of climate strategy at the Center for American Progress.

The industry disputes that. Regulators are allowing Shell to drill exploratory wells in the Arctic with plans in place to respond to a spill.

Still, Weiss says the overall goal should be reducing oil consumption, even as the industry touts its increasing production.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

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Industry experts are predicting the U.S. could, in the coming years, overtake Saudi Arabia as the world's largest petroleum producer. That's because an oil boom is underway here in the U.S. As NPR's Jeff Brady reports, since 2008, domestic oil production has increased dramatically, reversing what was a nearly three-decade decline.

JEFF BRADY, BYLINE: There's been plenty of discussion about natural gas drilling booms around the country, but Adam Sieminski, with the U.S. Energy Information Administration, says there's also a big story when it comes to oil.

ADAM SIEMINSKI: Well, U.S. production had been trending down for a number of years and recently has moved up.

BRADY: Sieminski says last year, the U.S. produced more than five-and-a-half million barrels a day. Add in things like natural gas liquids, and that number rises to more than 10 million barrels a day.

SIEMINSKI: That puts you pretty close to Saudi Arabia's 11 million barrels a day plus of production.

BRADY: Saudi Arabia could always increase production from its vast reserves, but within the U.S. oil industry just the prospect of approaching Saudi Arabia's production is very appealing. At the research company IHS, people like John Larson have been examining the effect of that extra oil production on the U.S. economy.

JOHN LARSON: This is a remarkable change. It's truly transformative. It's fundamentally changing the energy outlook for this country.

BRADY: Much of the new oil being produced in the U.S. is by unconventional means, such as hydraulic fracturing or fracking. That involves pumping huge amounts of water underground along with sand and some chemicals. The pressure breaks up shale formations and releases oil. An IHS report this week shows this unconventional production supports 1.7 million jobs, and John Larson says that likely will increase to three million within eight years.

LARSON: This is about jobs. You know, it's about blue-collar jobs. These are good jobs. The average wage for these jobs is about $35 an hour.

BRADY: The new positions are in places like North Dakota, which is now the number two producer of oil in the U.S. behind Texas, and the industry anticipates big expansion. Rayola Dougher is a senior economic adviser for the American Petroleum Institute.

RAYOLA DOUGHER: If you look at Ohio, for example, they have great potential to be a major oil producer in the United States. Parts of Texas, Louisiana, Alabama, Tennessee, I was in, you can see these basins all over the United States, and it's very exciting.

BRADY: But new technologies can carry new risks. Some worry hydraulic fracturing may pollute groundwater, and others warn there are potential problems in exploring for oil on new frontiers. Daniel Weiss is director of climate strategy at Center for American Progress.

DANIEL WEISS: In addition, oil companies want to open up areas off the northern coast of Alaska in the Arctic Ocean, where they are not prepared to address a major oil blowout or spill like we had in the Gulf of Mexico.

BRADY: The industry disputes that, and regulators are allowing exploratory drilling in the Arctic. In any case, it's clear the oil industry is drilling in new places and in new ways here in the U.S., and that's leading to a steep increase in domestic oil production. Jeff Brady, NPR News. Transcript provided by NPR, Copyright NPR.