Briggs: U.S. oil and gas production numbers tell the story

Don Briggs

President, Louisiana Oil and Gas Association

The United States has experienced an oil and gas revolution over the last eight years through unconventional or shale drilling in plays all over the country. From Williston, North Dakota, to Hobbs, New Mexico, to Corizo Springs, Texas, shale plays have been producing record numbers for the oil and natural gas industry. And the numbers show the astounding increase.

By sheer numbers, the United States has become the largest producer of petroleum liquids in the world. In just the last eight years, the United States has increased crude oil production in its shale plays from roughly 5 million barrels per day, to numbers reaching 9.3 million barrels per day. While the current oil production in the United States sits at around 8.7 million barrels per day due to the current downturn, this is still 80 percent more production from less than a decade ago.

So, while Russia produces just over 11 million barrels a day of crude oil and Saudi Arabia produces more than 10 million barrels a day to the United States’ roughly 9 million barrels a day of crude oil, these numbers do not even take into consideration other supplies like liquefied petroleum gases, biofuels and other products refined across the Gulf of Mexico region. When comparing the total numbers of all products related to oil, the United States takes the cake. The United States produces 14.8 million barrels a day compared to Saudi Arabia at 11.7 million barrels a day and Russia’s 11.5 million barrels a day.

Take a moment to let your mind rest from digesting all the numbers above and then we will discuss what this has to do with global demand and price. The Organization of Petroleum Exporting Countries (OPEC) has been dominating the price structure for oil for several decades. The oil lens in which you looked at global pricing was by observing OPEC’s next move. The United States has completely changed this game.

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As of lately, the international news stories are swirling about Saudi Arabia (the largest OPEC producer), Iran and Russia concerning whether or not they would reduce their production to help the crude oil price increase. Saudi Arabia, particularly, is in a bit of pickle. If they reduce production, they will give up further market share to Iran who has recently had sanctions lifted on their ability to export oil on the global market. Let’s not forget the United States that sits across the pond from the Middle East. As we have increased production by roughly a million barrels a day for each of the last eight years, Saudi Arabia cannot truly afford to back down on production.

So if any media or financial analyst from around the globe says that the solution is solvable by the Saudis or Russia diminishing production, the answer is simply not that easy. The Asian markets demand for oil has dropped, Iran has the ability to place several million b/d back into the global market, and the United States has the ability to pump out more than 9 million barrels a day in the right price environment.

Times are tough for the U.S. oil and natural gas market. But if we just look at the production numbers, the United States’ oil and gas market is positioned to be the true swing vote for global prices for many years to come.

— Don Briggs is president of the Louisiana Oil and Gas Association.