US Tops Russia as World's Largest Oil and Gas Producer

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**Frazzled**

In your face Belgium!

https://finance.yahoo.com/news/u-ousts-russia-worlds-top-090118951.html

U.S. Ousts Russia as Top World Oil, Gas Producer in BP Data
Bloomberg By Rakteem Katakey

The U.S. has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.

U.S. oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP Plc’s Statistical Review of World Energy released on Wednesday. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.

The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.

“We are truly witnessing a changing of the guard of global energy suppliers,” BP Chief Economist Spencer Dale said in a presentation. “The implications of the shale revolution for the U.S. are profound.”

The other major shift BP’s report shows is China’s energy demand growing at the slowest pace since the Asian financial crisis of the late 1990s as the economy slows and the country tries to reduce its reliance on heavy industry.

“Growth in some of China’s most energy-intensive sectors, such as steel, iron and cement -- which had thrived during China’s rapid industrialization -- virtually collapsed in 2014,” said Dale, a former Bank of England chief economist who joined BP last year.

In the U.S., the boom in oil and gas production has started to change the economy profoundly. Cheap fuel has seen manufacturing return to the U.S. as the country produced about 90 percent of the energy it consumed last year.

Last year, imports equaled 1 percent of GDP, according to BP’s data. In 2007, just before the financial crisis, U.S. energy imports accounted for about half of the current account deficit of 5 percent of GDP.

Shale drillers from Exxon Mobil Corp. to Chesapeake Energy Corp. spent about $120 billion last year in the U.S., more than double the amount five years earlier. The surge in output and a slowdown in global demand have pushed crude oil prices down about 40 percent in the past year.
Lower Prices

The lower prices will force some producers to shut in “frothy activity” at some shale fields in the U.S. but most output can work even at current prices, BP Chief Executive Officer Bob Dudley said in London on Wednesday. The number of rigs drilling in shale fields are down by half from an October peak and may stabilize by the end of the summer, he said.

“The shale revolution hasn’t run out of steam in the U.S.,” Dudley said.

The U.S. increase in oil output last year, helping it to overtake Saudi Arabia as a crude producer, was the first time a country has raised production by at least 1 million barrels a day for three consecutive years, BP said.

Among other producers outside the Organization of Petroleum Exporting Countries, Canada and Brazil also reported record production last year, prompting OPEC’s policy shift of ditching price support for defending market share.

On the demand side, countries outside the Organization of Economic Cooperation and Development accounted for all of the net growth in global consumption of 0.8 million barrels a day, or 0.8 percent, last year, BP said. Chinese consumption growth, though slower, still jumped 390,000 barrels a day, the biggest increase in the world.

Oil consumption in developed nations dropped 1.2 percent, the eighth decrease in the past nine years. World natural-gas consumption grew 0.4 percent last year, compared with the 10-year average of 2.4 percent.

The world’s coal use also increased 0.4 percent, slower than the 10-year average annual growth of 2.9 percent, with consumption in China almost slowing as the nation seeks to cut pollution and use more gas for power generation. Coal’s share of primary-energy consumption fell to 30 percent.

**Sigvatr**

USA! USA! USA!

**whembly**

Yay?

Don't we still have an export ban?

**Frazzled**

Yep. We can however export distillates (aka all the refined product) as well as natural gas and natural gas liquids.

**reds8n**

... Certainly explains why Obama is invading through Texas then !

**whembly**

Frazzled wrote:
Yep. We can however export distillates (aka all the refined product) as well as natural gas and natural gas liquids.

Interesting...

I wonder if it make any sort of blip globally (or even locally) if we were able to export oil.

: off to do some research:

**Frazzled**

Incorrect, Gov Abbot stopped them cold by calling upon "other powers" to bring forth the deluge.

In other news 200,000 bikers are going to be in Austin this weekend. I'm sure they won't be ornery about that Waco thing.
Frazzled will be holed up in the bunker, throwing a fajita party. Wife bring me more tequila!

**whembly**

Frazzled wrote:
Incorrect, Gov Abbot stopped them cold by calling upon "other powers" to bring forth the deluge.

In other news 200,000 bikers are going to be in Austin this weekend. I'm sure they won't be ornery about that Waco thing.
Frazzled will be holed up in the bunker, throwing a fajita party. Wife bring me more tequila!

I'll bring the Queso!

**Frazzled**

Not needed. Our parties are always fully stocked unless you want something specially grilled.

Because, as the immortal bard once said "I am river to my people!"*

*After his wedding reception, Frazzled sent everyone home with to-go bags of barbeque and cake. If you don't gain weight at a Frazzled party, you're doing it wrong.

**Do_I_Not_Like_That**

"US Tops Russia as World's Largest Oil and Gas Producer."

Two questions:

1) What the hell are you doing in the Middle East?

2) Does this mean that the USA will invade itself?

**Frazzled**

Do_I_Not_Like_That wrote:
"US Tops Russia as World's Largest Oil and Gas Producer."

Two questions:

1) What the hell are you doing in the Middle East?

2) Does this mean that the USA will invade itself?

1. No one including POTUS has a clue what we're doing . Confusion is Strength!
2. Already ahead of you. Jade Helm...

**Soladrin**

Why Belgium..?

**Frazzled**

Soladrin wrote:
Why Belgium..?

Because Belgium is the gateway to Holland.

**Kilkrazy**

This is a national disgrace.

Why does the headline not read, "Texas tops Russia as World's largest oil and gas producer"?

**Do_I_Not_Like_That**

Kilkrazy wrote:
This is a national disgrace.

Why does the headline not read, "Texas tops Russia as World's largest oil and gas producer"?

Because Texas is not a sovereign nation?

Automatically Appended Next Post:

Frazzled wrote:
Soladrin wrote:
Why Belgium..?

Because Belgium is the gateway to Holland.

What's your beef with the Dutch. Nice country, lovely people, great beer.

**Frazzled**

exactly. This Shangra La shall not stand.

**Sigvatr**

Soladrin wrote:
Why Belgium..?

Belgium hosts the best fries in the world.

**Dreadwinter**

Sigvatr wrote:
Soladrin wrote:
Why Belgium..?

Belgium hosts the best fries in the world.

Fries? French fries or are we talking like fish fries?

**Frazzled**

Freddom fries!

**sebster**

This gets really interesting when you start thinking about the vast shale reserves in the rest of the world. The USA has, once again, led the world in exploiting this resource, and now the rest of the world will, once again, follow. It probably won't happen on a large scale for a while, simply because the expansion in US production has dropped the price so low it isn't worth sinking the money in to new fields, but as the price drifts up again that'll change.

Exactly how that will wash out in the long term, in terms of energy prices and in terms of geo-politics is anyone's guess. Probably one safe bet is that it will suck for the middle east.

**plastictrees**

'So low' being higher than prices were in 2005. People have really lost perspective with the hysterical media coverage of the price drop.
Companies had become bloated and inefficient, with the cut backs on exploration were going to see a pretty steep production decline in the mid to long term.
I doubt that we'll see a ton of shale exploitation outside of North America. Production is getting cheaper all the time, but infrastructure plays a huge role in the costs involved. The 'northern Bakken' in the NWT is massive, but horribly inaccessible and just not worth touching until we see oil back in the mid $70s.

If the Middle East is upset then shale producers will be as well, unless the US bans oil imports the two are still tied to oil prices and the Saudis, at least, have much lower overhead than shale producers. We're literally seeing that play out right now.

The unfortunate reality is that at this point it makes more sense from an oil perspective to let ISIS do it's thing. More turmoil in the Middle East = more production disruption = higher oil prices = more opportunity for NA companies to take advantage of NA sources.

**Do_I_Not_Like_That**

sebster wrote:
This gets really interesting when you start thinking about the vast shale reserves in the rest of the world. The USA has, once again, led the world in exploiting this resource, and now the rest of the world will, once again, follow. It probably won't happen on a large scale for a while, simply because the expansion in US production has dropped the price so low it isn't worth sinking the money in to new fields, but as the price drifts up again that'll change.

Exactly how that will wash out in the long term, in terms of energy prices and in terms of geo-politics is anyone's guess. Probably one safe bet is that it will suck for the middle east.

I thought Saudi Arabia had killed the US shale oil industry?

**whembly**

Do_I_Not_Like_That wrote:
sebster wrote:
This gets really interesting when you start thinking about the vast shale reserves in the rest of the world. The USA has, once again, led the world in exploiting this resource, and now the rest of the world will, once again, follow. It probably won't happen on a large scale for a while, simply because the expansion in US production has dropped the price so low it isn't worth sinking the money in to new fields, but as the price drifts up again that'll change.

Exactly how that will wash out in the long term, in terms of energy prices and in terms of geo-politics is anyone's guess. Probably one safe bet is that it will suck for the middle east.

I thought Saudi Arabia had killed the US shale oil industry?

Nope.

In fact, they've found a massive deposit in Canada recently.... larger than what the US current has.

**Frazzled**

Canada petroleum market is imploding actually.

**whembly**

Frazzled wrote:
Canada petroleum market is imploding actually.

Short term, yes.

Long term... vast potential.

**Do_I_Not_Like_That**

Hang about. I thought Saudi Arabia was destroying the USA's shale oil industry, now you're saying it's Canada?

Payback time for the invasions during the war of 1812

**PhantomViper**

Frazzled wrote:
Canada petroleum market is imploding actually.

But isn't that the rule for every one of these shale oil explorations? That with the current oil prices they are simply not profitable enough to be worth it?

**Frazzled**

whembly wrote:
Frazzled wrote:
Canada petroleum market is imploding actually.

Short term, yes.

Long term... vast potential.

only at a certain price point.

**whembly**

Frazzled wrote:
whembly wrote:
Frazzled wrote:
Canada petroleum market is imploding actually.

Short term, yes.

Long term... vast potential.

only at a certain price point.

Of course, last I heard is that for shale oil extraction is at $65/ to turn a profit.

Remember, about 3 years ago, that profitability target was in the $90 /barrel range.

FWIW: Current oil prices is hovering around $60/ barrel, and granted it's been very volitile for a while.

We'll see.

**dereksatkinson**

whembly wrote:
I wonder if it make any sort of blip globally (or even locally) if we were able to export oil.

It's irrelevant because we are still a net importer of oil and they are including natural gas in there. They aren't even remotely the same thing.

Do_I_Not_Like_That wrote:
I thought Saudi Arabia had killed the US shale oil industry?

It has and the job losses we've seen over the past 9 months reflects that. The only reason a lot of these companies are still in operation and producing is because they did forward sales and have obligations to deliver their product.

For those of you who don't understand what a forward sale constitutes.. The oil company issues the debt to finance the production. Then sells a futures contract so there is certainty of getting the price they need in order to be profitable(this is the forward sales contract).

The number of companies that did this is likely pretty high considering 17% of the high yield debt market is from oil and gas. http://online.barrons.com/articles/high-yields-oil-slick-1416028569

The problem with this though is that we do NOT have enough commercial open interest to cover the debt they took out. We can see how much open interest there is in the COT (commitment of traders report) which is published weekly. So once they eat away at their forward sales (at higher prices) they will have to face the reality that their projects aren't economic at these price levels. That's when we will see production suddenly fall off a cliff.