The United States is the world's biggest producer of crude oil for the first time since 1973. It has reclaimed the number 1 spot from Saudi Arabia and Russia according to preliminary estimates published on Sept 12 by U.S. Energy Information Administration in its Short-Tern Energy Outlook.
The strong performance was particularly observed from light sweet crude oil grades. It has driven the rapid increase of U.S. crude oil production since 2011. EIA expects the United States to sustain the top position, exceeding Russian and Saudi Arabian crude oil production, for the remaining months of 2018 and through 2019.
This is the first time that the United States surpassed Saudi Arabia in more than two decades. This is also the first time since 1999 that Washington outdid Russia's crude oil production.
The EIA's report noted that the growth was driven by areas in the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana.
Indeed, Texas' ExxonMobil and Lone Star have spent billions of investments to take advantage of the region. The latter is in fact on track to produce more oil than either Iran or Iraq according to CNN. If Texas were a country, it could be ranked as the world's third largest oil producer.
The EIA report stated that there had been an oil price decline in mid-2014. At the time, U.S. producers reduced their costs and temporarily reduced their oil production. While this is happening in America, Russia and Saudi Arabia have sustained growth in their respective oil sector.
The United States started going back on track in early 2016 when investments poured into the industry. CNN noted that this shift was driven by U.S.' strategic adoption of technological advances in drilling called the "fracking." The technology allowed the United States to drill oil and natural gas deep into subterranean rocks and existing fissures. After adopting the technology, drilling costs have declined significantly.
Fracking has changed the game for the United States, said Ben Cook, portfolio manager at BP Capital Fund Advisors.
Bob McNally, president of Rapidan Energy Group, said the present report from EIA is a historic milestone for the United States and a reminder to the world that it should not bet against the US oil industry. McNally, a former energy official during the Bush administration, said technological advancements, sufficient capital to invest, and the resourcefulness of home-grown drillers are major factors in the growth of U.S. oil production.
