U.S. set record for crude oil production in August, becoming world’s leading producer for the month
Energize Weekly, November 7, 2018
U.S. crude oil production reached 11.3 million barrels a day in August, surpassing Russian output, and making the U.S. the world’s leading crude oil producer, according to the federal Energy Information Administration (EIA).
Production records were set in several states. Texas posted a record 4.6 million barrels a day, followed by North Dakota at 1.3 million barrels a day. Production records were also set in Colorado, New Mexico, Oklahoma and West Virginia. Offshore Gulf of Mexico production also reached a record high of 1.9 million barrels a day.
The Russian Ministry of Energy estimated that its August production was 11.2 million barrels a day.
The Permian Basin, which straddles West Texas and Eastern New Mexico, accounted for 63 percent of Texas crude production and 95 percent of New Mexico’s production, with Texas production increasing 15 percent to 683,000 barrels a day between January and August 2018. New Mexico production was up 25 percent to 182,000 barrels a day during the same period.
The EIA had projected that Permian pipeline constraints would increase the price differential between West Texas Intermediate (WTI) crude at Cushing, Oklahoma, and at Midland Texas, dampening production. In August, this differential was more than $16 a barrel, up from $0.43 a barrel in January, the EIA said.
The basin’s output, however, exceeded the agency’s forecasts as industry efficiencies in pipeline utilization and increased trucking and rail transport in the region allowed crude oil production to continue to grow at a higher rate than EIA expected.
WTI-Cushing spot prices averaged about $68 a barrel in August, down from the July average of $71 a barrel. EIA forecasts the average spot price for WTI to remain near that level in the fourth quarter of 2018. Higher crude oil prices at the end 2018 and into 2019 could lead to an additional 1 million barrels a day of production, the agency said.
Gulf of Mexico production from May to August grew by an average of 130,000 barrels a day each month. The increase came as a number of fields returned to full production after “several months of maintenance and other infrastructure issues that arose from Hurricanes Harvey and Nate in 2017.”
The EIA said that domestic crude oil production has increased in the last 10 years primarily as a result of horizontal drilling and hydrofacturing in tight oil formations, such as shale. Oil from tight formations was 6.2 million barrels a day, or 55 percent of August production, EIA estimated.