American Oil Most Since First Well in 1859 Signals Independence

Oil Drilling Rig

Oil Drilling Rig

By Asjylyn Loder – Dec 18, 2012 – Bloomberg

The U.S. expanded its oil production this year by the most since the first commercial well was drilled in 1859, upending a belief that Americans were increasingly hooked on foreign crude.

Domestic output grew by a record 766,000 barrels a day to the highest level in 15 years, government data show, putting the nation on pace to surpass Saudi Arabia as the world’s largest producer by 2020. Net petroleum imports have fallen by more than 38 percent since the 2005 peak and now account for 41 percent of demand, down from 60 percent seven years ago, moving the U.S. closer to energy independence than it has been in decades.

Seven years after President George W. Bush declared “America is addicted to oil, much of which is imported from unstable parts of the world,” the country has so much crude that it was able to join Europe in choking off exports from Iranwithout pushing U.S. benchmark prices over $100 a barrel. And refining capacity helped make the U.S. the world’s largest fuel supplier. Even in Venezuela, where Exxon Mobil Corp. (XOM)’s assets were seized, more and more cars run on gasoline made in America.

“The U.S. has a huge lead in the 21st century in maintaining its superpower status,” said Ed Morse, global head of commodities research at Citigroup Inc. in New York. “There was absolutely no way to anticipate the level of growth in the oil supply.”

Faster, Cheaper

America’s latest oil rush was spurred by new technology that has made drilling faster, cheaper and better at unleashing oil from rock formations, even as it has raised alarms among environmentalists about the potential danger to drinking-water supplies and intensifying greenhouse-gas emissions.

Producers, eager to profit from prices that have remained above $75 for more than two years, deployed as many as 1,432 rigs, the most in records going back to 1987. Trucks bearing pipe traversed Wyoming’s high desert plains and Oklahoma’s back highways, geologists pored over well logs from Colorado to New Mexico, and landmen trying to secure mineral rights crowded into courthouse record rooms from North Dakota to the Gulf Coast.

The U.S. will produce an average of 6.41 million barrels a day this year, a 14 percent increase from 2011, according to a Dec. 11 report from the Department of Energy. It’s the biggest annual gain in the number of barrels since the industry began when Pennsylvania’s Drake well ignited the first American oil rush in 1859, department data show. Saudi Arabia pumped 9.7 million barrels a day in November, according to data compiled by Bloomberg. The Paris-based International Energy Agency said last month the U.S. is on track to become the top producer in about eight years.

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