The United States of America has overtaken Saudi Arabia in the race for being the largest producer of oil in the world. The Bank of America Corporation stated that America has taken up the first place on the list of the world’s leading oil producing countries. Oil as being used a medium to extract energy from the shale rocks has helped to strengthen the country’s economy.
The rate of production of petroleum or crude oil, together with the liquids that are separated from the natural gas, of the United States of America has surpassed the rates of all other countries in the world, and even Saudi Arabia, making USA the biggest oil producing country in the world today. This has been developing for the first six months of this year, and the latest news support this fact. A number of surveys, and studies have been conducted, and all of the results point towards the US domination of the oil field. The country already became the largest producer of natural gas in the world back in 2010, and it was only a matter of time after which it would be the largest producer of crude oil as well. A certain Commerce Department of the country is going ahead with decision of allowing exporting or overseas shipment as some calls it, of processed oil, in the form of light oil known as condensate has started a speculation among people who are saying that the nation’s decision to place a four decade ban on every crude exports might not be true.
As the United States of America became the largest producer of natural gas, and oil, this fact had some big effects on the economies of some other counties other than the US as well. The Shale revolution of America has uplifted the American economy, and other international economies are keeping an eye out regarding this latest development. The low prices relating to energy in the United States of America have now become an important edge of the economy of USA.
The oil producing states of the Unites States of America such as Texas, and North Dakota have increased their rate of oil production. They are now using a technique where the shale rocks, which contain the oil, are split open using high pressure liquid. This process is called the Hydraulic Fracking or Fracturing. The pressure of the liquid is so high, that it literally cuts through the rocks. The increase in the production of oil is also accompanied by the laws that dictate that crude oil cannot be exported, to other countries, for a period of the next forty years. But some of the companies are in fact exporting oil, which has indeed prompted lawmakers to sit down, and discuss about the current laws that are in effect. Rumors suggest that the lawmakers are thinking of lifting the four decade ban on the export of crude oil.
The Bank of America Corporation anticipated that oil prices outside the United States of America would also decrease as an increase in the production of oil worldwide was thought of. But as that did not happen, oil prices are still quite high out the States. The out boom is partly a cause for this to happen. There still remains a 47 discount on each barrel of oil for the European counterparts of the New York Mercantile Exchange, along with the Brent contract regarding the ICE Futures Europe’s London based exchange.
The rise in the production of oil in the United States also comes at a time when the output from Iraq is threatened by an Islamic insurgency. Iraq being part of the Organization of petroleum Exporting Countries the second largest producer of oil, is seconded by Saudi Arabia. Territories of Iraq have been occupied by an Islamic cell calling themselves as the Islamic State. This Islamic cell has occupied pats of Northern Iraq. As a result of this insurgency, the oil production, and distribution from the southern states have been hugely disrupted, causing irreparable damage to the overall production of oil from Iraq. The loss that was suffered as a consequence of this insurgency is huge, and this could not have come at a worse time than it did for Iraq. In other news around the world, overseas shipment of crude oil from Libya have been massively disrupted by the protests that are going on. The oil production of Nigeria is also curtailed as a result of the oil sabotage and theft.
The oil exports from Libya will resume once all the protest have stopped, and the matter resolved. Efforts are underway to escalate the process, and to start the exportation of oil from the eastern part of the country. The plan is to take back these ports from the control of the rebels, and to restart the exportation of oil to other countries, and as a result stabilize the economy of the country. In the last year, the shipments of crude oil were stopped by the rebels who control the port back then. This fact have been backed by Mohamed Elharari the spokesperson of the National Oil Corp, which is state-run.
Julian Lee, an oil strategist writing for Bloomberg News First Word, says that the United States of America will further consolidate the position it is in now i.e. the leading producer of oil in the world, in the following months, if the Libyan supplies put a limit on the need for oil from Saudi Arabia. However this is entirely his own observation, and no organization has issued a similar statement based on studies, or survey so far.
The process of hydraulic Fracturing has been extensively used in the states of North Dakota, Texas, Pennsylvania, and all the other oil producing states of the United States of America. According to the U.S. Energy Information Administration, the use of this technique for the last seven years is directly responsible for the rise in the production of natural gas, and oil. At present in the United States of America, $200 billion is the annual investment in natural gas and crude oil. This means that almost 20% of the total spending, i.e. private fixed.
In a previous report on the 27th of June, Blanch commented that the first positive step towards dispersing the build-up of crude oil in the United States of America, along with the rest of the continent, is the Condensate export licenses which are awarded by the Commerce Department of America.
The condensate, which is really a form of oil, is being allowed for exportation to other countries. The condensate that is being produced in the state of Texas, has to be subjected to preliminary distillation so that it can be cleared for overseas shipment. On the 25th of July, the Pioneer Natural Resources Co. stated that the Commerce Department finally went ahead with the decision to lift the ban on the exportation on crude oil for a period of forty tears. The United States of America can have a daily export of 1 million barrels of crude oil, also including almost 300,000 of condensate, by this years end.
by Redacción Gas Shale México