In 2018, the United States petroleum production increased 16% while simultaneously increasing natural gas production by 12%. According to the Energy Information Administration (EIA), “these totals combined established a new production record.” The United States has been the largest producer of natural gas since it passed Russia in 2011, and last year the U.S. surpassed Saudi Arabia to become the largest producer of petroleum. All signs indicate that the U.S. will continue to expand their production prominence, and over the next decade, the U.S. is set to account for 61% of all new global oil and gas production, nearly nine times the amount of Canada who projects to be second on the production increase list.
The United States Department of the Interior announced a revision last week about an increase in the potential production in the Wolfcamp Shale and Bone Spring Formation. The announcement stated, two underground layers in the Delaware Basin in the Permian shale play of West Texas and New Mexico, contain 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas and 20 billion barrels of natural gas liquids. This represents the largest pool of oil and gas reserves anywhere in the United States. The Permian is already the driving force in production hitting an all-time high in November of 11.7 million barrels per day (bpd) as it is the biggest producer and boasts the quickest rate of production at 3.63 million bpd.
Oil well drilling in the United States has increased dramatically in the last five years. The increase in drilling activity has had a direct impact on petroleum pricing. Rig counts are an indicator for the potential supply picture of the oil and gas industry. A sharp increase in the number of drilling rigs domestically, would potentially affect the direction of product prices. The industry tends to speculate the greater number of active drilling rigs, the lower the price.