Tags: oil | gas | us | american | challenges

US Keeps Setting Oil, Gas Records as Challenges Loom

US Keeps Setting Oil, Gas Records as Challenges Loom
Aleksandr Gerasimov | Dreamstime.com

By
Wednesday, 11 September 2019 09:45 AM Current | Bio | Archive

As the data keeps flowing in to quantify the enormous growth that the U.S. has experienced in its oil and gas sector, it is abundantly clear that the shale revolution has made the U.S. the largest producer in oil and natural gas and an increasingly dominant exporter of petroleum (crude oil, natural gas liquids, bitumen and condensate) and natural gas.

According to the Energy Information Administration (EIA), in 2018 U.S. petroleum and natural gas production increased by 18% and 12% respectively, “one of the largest absolute petroleum and natural gas production increases from a single country in history.”

Here are some other compelling facts about U.S. petroleum and natural gas production:

  • U.S. crude oil production increased by 17% in 2018, setting a new record of 11.0 million barrels per day (b/d) (EIA figures). Production in the Permian Basin of Texas and New Mexico accounted for most of that growth.
  • It is anticipated that U.S. oil production will account for 70% of the total increase in total global oil production through 2024, an addition of 4 million b/d (EIA figures).
  • The U.S. produced 4.3 million b/d of natural gas petroleum liquids (NGPLs) in 2018, more than doubling U.S. NGPL production since 2008. (EIA figures)
  • U.S. dry natural gas production increased by 12% in 2018 to 28.5 billion cubic feet per day (Bcf/d), setting a new record high for the second year in a row, creating additional opportunity (and need) for natural gas exports. (EIA figures)
  • The U.S. shale boom boosted U.S. economic growth by 10% between 2010 to 2015, according to the Federal Reserve Bank of Dallas. Despite the fact that the sector only makes up 1.5% of the overall economy, that growth single-handedly kept U.S. GDP in the black for six years.   

While the news about U.S. petroleum and gas production is exciting in terms of U.S. output and benefits to the economy, jobs, geopolitics and national security, the U.S. petroleum and natural gas sector is extremely vulnerable due to a number of factors, ranging from low margins, dwindling investment interest and available capital, to global demand, environmental and societal challenges.

First, the luster of shale oil and gas has definitely faded for investors. Lower commodity prices are further squeezing already low margins. Investment in the oil and gas sector as a percentage of overall investment has declined considerably. Investment in new shale oil and gas production is expected to decline in 2020 and a wave of mergers and acquisitions in the exploration and production and oil services sectors is widely anticipated.

Environmental and social pressures are also impacting the sector in both the short- and long-run. Issues associated with shale production, including hydraulic fracturing, water management, and continued flaring of natural gas in the Permian and elsewhere are palling the image of shale and fossil fuels in general. In addition, climate change remains an enormous challenge for oil and gas as investors increasingly focus on climate change performance as a criteria for investment decisions. Natural gas, long heralded for its clean energy, bridge fuel, and GHG reduction attributes, finds itself under attack from environmental NGOs. Energy companies that establish ESG programs and improve their performance are better positioned to meet these challenges. 

The Cornerstone Energy Solutions US Energy Issues Matrix for 3rd Quarter 2019 clearly summarizes the critical issues facility the US energy industry:

  • Low Commodity Prices
  • Lack of Investment Capital
  • Trade & Tariffs Policy
  • Global Geopolitics
  • Demand Growth/Production Risk
  • Climate Change/Net Zero
  • Gas Flaring

You can view the actual matrix here. As you can see from the issues in red box labeled High/High, the US industry has some tough challenges ahead. It is time for us to roll up our sleeves and meet those challenges head on so that this revolution can continue.  

Jack Belcher is senior vice president of Cornerstone Energy Solutions and advises energy, transportation and financial services clients on government relations, regulatory affairs, risk management, ESG management, coalition building and stakeholder relations. He is also managing director of the National Ocean Policy Coalition.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
JackBelcher
US Keeps Setting Oil, Gas Records as Challenges Loom
oil, gas, us, american, challenges
669
2019-45-11
Wednesday, 11 September 2019 09:45 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved