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U.S. overtakes Russia, Saudi Arabia in worldwide oil production

John Deede | Shale Plays Media Google+

Bank of America Corp. has announced that the United States has become the world’s biggest oil producer. Grant Smith from Bloomberg News reports:

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.

“The U.S. increase in supply is a very meaningful chunk of oil,” Francisco Blanch, the bank’s head of commodities research, said by phone from New York. “The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”

Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking. The surge in supply combined with restrictions on exporting crude is curbing the price of West Texas Intermediate, America’s oil benchmark. The U.S., the world’s largest oil consumer, still imported an average of 7.5 million barrels a day of crude in April, according to the Department of Energy’s statistical arm.

Domestic oil production has not yet led to cheaper energy prices, but rather has reduced the global volatility that causes spikes in prices. Unrest in the Middle East, where a large percentage of global oil supplies originate, usually causes fluctuations in the price of oil as threats to oil shipments emerge. The conflict in Iraq shows us that despite a shock to global supply, the price of crude oil has remained steady. Due to the costs of shale extraction and limited export options, U.S. production will likely be unable to make a sizable dent in the global price of oil, but it seems to be cushioning the blow well.

Read the full article here: U.S. Seen as Biggest Oil Producer After Overtaking Saudi Arabia

Related: Texas is home to one-fourth of all drilling rigs worldwide

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