Report: North American oil output will hit all-time record by 2016

Maybe Hubbert’s Peak isn’t the tallest mountain after all.

North American oil production will hit a new all-time high by 2016 given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week.

U.S. oil production in areas like the Permian Basin, the Eagle Ford, Bakken and others will rise by a little over 2 million barrels per day between 2010 and 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects.

It’s a reversal of the steady downward production trend that started around 1970, when U.S. oil production peaked at around 9.5 million barrels per day.

Canadian crude production is expected to grow by about 971,000 barrels per day between 2010 and 2016, with much of it headed for U.S. refineries.

Combined, the U.S. and Canadian oil output will top 11.5 million barrels per day, which is even more than the amount produced at the peak in 1972.

The data assumes production levels stay roughly where they are right now, but the study doesn’t take into account predictions of growing global oil demand or the higher prices that follow.

The data was unveiled at a forum on natural gas liquids hosted by Platts in Houston this week.

(Image: Bentek Energy)

That production growth will be bumping up against pipeline capacity to move the crude to refineries and other users, said Rusty Braziel, Bentek’s vice president of sales and marketing.

In the past, the flow of oil in the U.S. tended to be from the South to the North/Northeast – mainly from the producing regions of Texas, Oklahoma and Louisiana to consumers in major cities.

But Canadian oil production is surging and most of the booming oil fields in the U.S. are located along a region that roughly runs south from North Dakota through West Texas. There’s an oversupply of oil to the Midwestern refineries, which has prompted construction of pipelines to move crude to the established refinery complexes along the Gulf Coast.

TransCanada’s hotly debated Keystone XL pipeline is the most visible of those projects, with plans to move Canadian tar sands oil all the way to refineries in Port Arthur, Texas. There are a number of other new pipelines in the works, however, as well as expansion of existing lines and reversals of existing North-to-South pipelines being considered.

47 Comments

  1. Bob

    Interesting article. Seems contradictary to this story…

    http://www.nationalreview.com/articles/278408/let-them-eat-windmills-mario-loyola?page=2

    #1
  2. Hey Tom – I work for an oilfield clutch supplier here in Houston and the increase in domestic and other North American drilling bodes well for us. A strong oilfield industry is vital to the economy. More drilling means more jobs, more parts manufacturing and increased equipment purchases. It’s a controversial and exciting time for our industry, thanks for reporting on it.

    All the best – Aly

    #2
  3. Dill

    Dill, baby, Dill!

    #3
  4. L. Ecrivain

    Gee, how terrific is this?! The ongoing destruction of the entire planet’s ecosystem is being lauded by the Chronicle, while not a word is printed about any kind of alternative (life-affirming) energy progress, nor any monies invested in changing things for one and all. (including the morons who continue to get richer on oil while surpressing alternate energies, and have apparently lost sight of the fact that they have to live on this choking planet too)

    #4
  5. ImagineRealHope

    Imagine what could happen if the U.S. Govt. would get out of the way.

    #5
  6. WriterDude

    The only problem is that when it comes to oil production and oil consumption, it’s good to have ample supplies produced at home, but ideally, you would like to consume someone else’s oil, not yours. So, the problem then becomes having enough trade exports to balance against the oil imports so the trade deficit is not so great.

    #6
  7. richard

    Imagine? A Macondo type disaster per week? “The data assumes production levels stay roughly where they are right now” In other words, if the administration does nothing different than it is doing right now, North America will have record production in 5 years. Got that?

    #7
  8. Tom Fowler

    WriterDude:
    I may be missing part of your argument: why is it better to consume oil from another country vs. your own?

    #8
  9. ThePrize

    So much for peak oil, eh?

    #9
  10. Lamer

    Wait… this can’t be true because according to Republicans, Obama has banned oil production in the US.

    #10
  11. SarahATP

    Interesting how more rigs are drilling, and more oil and NG are being produced under Obama than under Bush. Not that anyone wants to acknowledge that, but facts are facts. I can’t wait to read the spins on this!! LOL Hey Tom… notice that that story on the tax refund to the refineries never surfaced again!! LOL

    #11
  12. richard

    It is better to use other countries oil in order to maintain our reserves. The US consumes 22% of the oil used in the world per day yet has only about 1.5% of the world’s reserves.

    #12
  13. KB

    Tom, WriterDude usually doesn’t understand economics, especially oil…like Ecrivain above him. They both need to move back to the woods and hunt and fish for their survival…like we all did in the 1800′s.

    #13
  14. Bob

    Oh my goodness. Drilling for oil is leading to the destruction of the entire planet’s ecosystem? I had absolutely no idea. We should immediately halt all drilling this very second. We can all live off the land in caves or little huts and eat tree bark every day. That sounds like paradise.

    Thanks for the info L. Ecrivain

    #14
  15. Dollar

    And there was no mention of the Utica shale in Ohio, CHK announces their intial results from four wells today

    http://www.chk.com/News/Articles/Pages/1610725.aspx

    and @SarahATP …………….. I can promise you, without a doubt , that oil production arriving on the market today, was not the result of anything Obama has done ……….. in fact, it’s done in spite of Obama.

    And the real reason for this increase, is horizontal drilling/hydraulic fracturing …… that is the result of Texas oil man George Mitchell. Who refused to give up on producing gas/oil from tight shale formations.

    It was combination of American ingenuity and capitalism .

    #15
  16. Dollar

    @richard, yeah , its always better to be at the mercy of other countries, and to be forced to defend those countries, and have to worry about severe oil price spikes …….. rather than produce our oil and create thousands and thousands of good paying jobs here in America.

    Any idiot can see that foriegn oil is far superior to producing domestically.

    #16
  17. olddispatcher

    If the government could just get out of the way…….

    How about if we start with the Texas Railroad Commission? Yup, back in the good old days, before the RRC started choking the industry to death, back when it was common to burn down another companies’ wells and their refineries, oil was so overproduced that the price hit 10 cents a bbl and violence was so common that the National Guard, which at the time I think was called the Ready Reserve, had to be called in to restore order.

    The Martial Law was not so bad if you didn’t mind being shot on sight for being out after curfew. Besides, there were not that many places to go in Kilgore after dark.

    And who was the smart guy that declared oil could no longer be stored in open pits? That worked OK at Spindletop until that fire belching locomotive set two million bbls of oil on fire. Then regulations were drafted for open pit storage AND the operations of locomotives. It is clear that some agencies have nothing to do but choke off free enterprise by writing rules that protect only the public and not folks trying to earn a dollar.

    I know some people try to blow off over-regulation in the oil business by pointing out there never in the history of the US have so many drilling rigs been active, but just think how many would be active if there were no regulations? Billions? Trillions? One every other square yard? Sadly, we will never know. There is just too much regulation for this to ever be possible.

    #17
  18. Dollar

    And because of this increase in domestic production, there’s a new steel plant being constructed in Younstown , Ohio. The first new steel plant up there in like…….. forever.

    And US Steel is expanding their tubular production in the old rust belt.

    And Dow Chemical, is bringing jobs back to America , with a multibillion dollar investment in new chemical plants in the NE, because the price of nat gas which they use in lot of their operations, is much lower here than overseas. And they don’t see the price going up for a long long time.

    This drilling and production boom, is creating an industrial renaissance in the good ole USA.

    Course, there’s always those envirowackos, who see that as a bad thing.

    #18
  19. Tom Fowler

    Dollar:
    The Bentek guys said their projection does not take into account any potential in Utica, but focuses on the main, more established basins. I think they felt there are still too many unknowns in some of the developing basins (or redeveloping, as it may be) to try to bake in all the numbers.

    #19
  20. olddispatcher

    Bob….

    Don’t be so hasty to put down tree bark. I know a guy that builds his own black powder weapons and then boils the bark of some tree to ‘blue’ the metal parts. No one shoots these guns as they are artistic collectors items, but the blueing system he uses works just as well today as it did in the 1500′s to prevent rust on the metal.

    From what I have seen of this process I don’t think you could live on it, though. Maybe you could if your stomach was made of steel.

    #20
  21. olddispatcher

    Evirowackos see pollution as a bad thing? Maybe that’s because pollution is a bad thing. It is also an unnecessary thing.

    In the past there was no solution for much of the pollution that comes with industry. That is no longer the case. There are many pollution arresting devices on the market and there have been for at least 45 years. They work as they should and make living near such a plant a good thing for the people that work and live near these plants.

    Of course, you don’t have to use them. But you will look silly in court when nearby land owners force you to explain to a Judge why you chose not to.

    And if the additional cost of .00001% to your project such devices add will sink your business then it is doubtful you had a viable business plan to begin with.

    #21
  22. Ray Young

    For: Dollar
    September 28, 2011, 12:15 PM “Any idiot can see that foriegn oil is far superior to producing domestically.”

    Now lets see………those dollars go mostly to our enemies who use them against us. So, how is that better?

    Any thinking idiot should figure this out.

    #22
  23. SarahATP

    “It was combination of American ingenuity and capitalism .”

    Is that what they call wall street now?? Or… are you referring to the OCS Drilling Ban implemented by HW Bush that could have ended the first day of “W’s” presidency with a single stroke of a pen?? Instead, he waited until 08??? Keep on spinning.

    If you haven’t noticed, the USD vs the Euro is leveling. The dollar is now worth $0.73 vs the 62 cents it was under Bush. The price of gold is starting to drop because investers made their money on it, and their selling it off, and investors are buying US Bonds. Only a fool would buy gold now, as the USD is about to surge as the Europeans begin to suffer even more. But, for the uneducated, there is no sign of recovery. Only because they don’t understand what they are looking at.

    “W” could have made “Drill, Baby, Drill” happen his first day in office, and HE DID NOT!!! Now there is more oil and NG being produced, and more rigs drilling, and you want to credit Bush????? Are you kidding me?? I’m not a blind fool. Sell your spin elsewhere.

    #23
  24. SarahATP

    BTW Dollar… us “envirowackos” want our children to be able to breath and not grow three eyes. And unlike the capitalistic “trickle down” Tax Cut machine, we want the same for your children and grandchildren too. We don’t cheer executions, letting a 30 year old uninsured male die, or boo soldiers. And… we certainly don’t promote air and water laden with toxins that will trim YEARS off of our lives.

    #24
  25. Bob

    @olddispatcher, Your examples are in the extreme. Your point is well made but I don’t think people are saying the EPA has no role in implementing common sense regulations. The problem is that the EPA does not use common sense nor is it entirely concerned about the environment. Al Almendariz literally said in an open meeting that he knows many of the rules being implemented will have absolutely zero impact on air or water quality. The rules being implemented are for the purpose of exerting federal influence over state agencies. I think every person wants a clean environment for their families. The current EPA is making it impossible to balance a clean environment with a healthy economy.

    #25
  26. olddispatcher

    I don’t know about the whole macro-economic value of buying oil from overseas vs. drilling for it here. All I can see is Americans working in the oil business and making a lot of cash from it and it seems to be working for them.

    Perhaps I am short sighted, but somehow it seems that someone in the oil business building a 60 story tower in downtown Oklahoma City is better than someone building such a tower in Oman.

    Maybe I am just too old to learn new tricks, but a few weeks ago I saw a homeless guy pick up a job as a frack truck driver and he seemed happy about it, so I guess I should be, too.

    #26
  27. SarahATP

    “Your point is well made but I don’t think people are saying the EPA has no role in implementing common sense regulations.”

    @Bob… Perry, Bachmann, Paul and Palin are saying it every day. They say the EPA, IRS, NIH, CDC, DOE, SSA and ‘all’ of those racketeers MUST GO. So do you disagree with all these fine “candidates”???

    #27
  28. Dollar

    @Ray Young , are you responding to my sarcasm with sarcasm ?

    #28
  29. Dollar

    @SarahATP, you are not knowledgeable enough to even argue with, I will not waste my time on your drivel.

    #29
  30. olddispatcher

    Bob….

    I am old enough to remember when people did gripe about the very ‘extreme’ examples I pointed out. And that was years before the EPA was created.

    It seems to me that ‘Government Regulation’ is a crutch used by those that don’t understand how to navigate the system. If someone cannot operated a business without leaving a trail of the dead behind them then they are n the wrong business.

    The economics of the oil business have always been: If your well is producing you make money. If it is not then you don’t, and if it is producing you can afford to comply with the current regulations.

    It may sound simple, but when you get right down to it…. It is.

    #30
  31. David Gower

    We need a little good news every once in a while to keep us going.

    #31
  32. Bob

    olddispatcher,

    “It seems to me that ‘Government Regulation’ is a crutch used by those that don’t understand how to navigate the system. If someone cannot operated a business without leaving a trail of the dead behind them then they are n the wrong business.”

    I mistook you for a reasoned person. Apparently, extremes are the norm for you. Seriously, our businesses are not leaving “a trail of the dead”. You can’t possibly be serious. Why don’t you ask George McGovern about government regulation. That far left liberal politician finally saw how government regulation kills small businesses when he lost his hotel. Or ask the farmers in my neck of the woods in California about government regulation. Our federal government is creating a drought to save a fish at the peril of humans and businesses. Courts have now ruled twice that Ken Salazar and his department have willfully mislead and lied to their courts. The EPA is instituting arbritrary rules unfounded in the Clean Air Act and they should be taken to court for their zealotry.

    That is all. You may now go back to your delirium

    #32
  33. Ray Young

    @Bob, I guess you could say that……I just did not want funds for terrorists point to go unnoticed.

    BTW: It doesn’t take much to set off these enviro-terrorists, does it?

    In regard to federal agencies going…..I vote for the EPA to lead the pack and for the education cops to go with them!

    #33
  34. WriterDude

    Tom Fowler: Oil is a limited resource, and key to almost everything. Both WWI and WWII hinged on oil (and gas, especially gas for aircraft)(both Germany and Japan ran out of gas, … completely). If we consume our own oil, then we must import at some point. So, it is better to have a large stockpile in reserve to cushon against interruptions in supply and consume other countries oil. If they run out, we look elsewhere.

    #34
  35. WriterDude

    KB: Read “The Prize” Then get back to me once you’ve pulled your head out.

    #35
  36. DudefromWisconsin

    What is their take on Mexican oil production, which has dropped sharply over the past decade?

    #36
  37. Jackalope

    Sarah, much of the planned production comes from many years of research, development and exploration under Bush. Bush lifted the ban on offshore drilling off the Atlantic, Pacific, and Florida coasts that Obama reinstituted. Offshore is where the big reservoirs are – many in the Gulf make Prudhoe Bay seem small by comparison. And let me also remind you that you lefties spit on our soldiers and called them “baby killers”. Your hero, John Kerry, called them even worse names and is cheered for it. And you lefties are the first to support ending life in the form of “choice”.

    #37
  38. Tommy

    @L. Ecrivain you do realize that oil & gas companies put forth huge investments into alternative energy. My employer, which is an O&G operator, funded billions into AE last year. In fact we had to take the earnings from our upstream production group to bail out the $300,000,000 loss that our alternative energy division suffered last year!

    #38
  39. established.facts

    such a pity we dont need there oil for our house and car…
    we use the suppressed knowledge that they love to hide…

    #39
  40. fencesitter

    well jackalope…n bush never lifted oil production of of florida coast, Castro appearent has,

    #40
  41. Jay

    Good. I remember well, the oil rigs being sold for junk in the mid 80′s. Maybe we can reach 30 dollar oil again?.. when that oil goes online.

    #41
  42. Savvas

    This report is fair enough and probably sounds like good news for most Americans (I should say up front that I live elsewhere). However I think it’s a gratuitous and unhelpful ‘throwaway’ and completely unhelpful for the first line to cast doubt on Hubbert’s Peak. In so far as Hubbert talked about USA oil production he was referring only to conventional oil – not to oil shales, oil sands, GTL, ‘pre salt deposits’ etc etc. And he got the peaking of USA’s conventional oil production more or less dead right! Nearly all of the ‘new’ oil described as being found or booked up by this article is non-conventional stuff. It’s there – no argument. It’s also miles more expensive and difficult to produce than the stuff Hubbert was talking about. It will probably be produced and of course any notions of ‘running out of oil’ remain nonsense. But there will be no new ‘cheap oil’ paradise in the near (or even distant) future. The USA will need whatever domestic oil there is available to build a new economy that is free from the dreadful vulnerabilities so obvious today. The USA is very lucky to have this remaining domestic production because very shortly – probably within 10 years – both demand and buying power from China and then India will completely dominate world oil trades. What becomes unaffordable for US (and other Western) buyers at $90 barrell is very likely to still be affordable to China at $110 or higher. The implications are terrifying and should be very obvious to all still capable of thought. So don’t waste that domestic oil friends…

    #42
  43. 57nomad

    Good news in dark times. There are many benefits primary among them is that it will put an end to ass kissing some greasy camel jockey. Obama actually bowed to the king of Saudi Arabia, can you imagine that? If Obama had any balls he would have told the mighty king that we were going to require a years oil production for free for keeping his ugly ass on the throne instead of having his head on a pike in Qom on the wall around Ali Khameneis’ house.

    Secondly, It could be we are headed into a period of isolationism where we could bring our troops home and depend on the mighty US Navy. We’re a pretty productive country. If we have, and it looks like we do have, a virtually inexhaustible source of easily extractable energy we will not only be self sufficient we will be net exporters of everything. This downturn will be a dim memory. This country is going to be bucks up long before the end of this decade and this explosion in the supply of domestic energy is the reason. This is just the very beginning.

    We could possibly offset China’s labor costs with lower domestic energy costs. This is a whole new world. A new gigantic natural gas deposit was reported recently. This field is 170,000 square miles. It lies beneath several states. Chesapeake Energy said their preliminary wells in Ohio should produce 15 to 20 billion dollars worth of energy. The energy producing region itself is known as the Utica Shale, it is larger than the State of California.

    #43
  44. Dollar

    What many are missing here also, is that these tight shale formations exits globally. They are all over the world.

    Exxon just completed a horizontal/hydrofraced well in Poland. The Poles think they will become a nat gas exporter soon.

    Conoco has found tight shale formations in Australia.

    There’s an entire new world for exploration.

    One more thing about something SarahATP said above, about how she wanted her kids to have clean air.

    That’s always the choice with her side.

    Its do you want clean air or dirty air ?

    That’s a choice along the lines of, should we kick puppies or not kick puppies ?

    Well, how bout these choices for Sarah’s kids ……..

    Do you want them warm in the winter, or cold ?

    Do you want them to have food to eat, or starve ?

    Do you want light , or darkness ?

    #44
  45. This is a remarkable conclusion from a reputable source. I presume there is significant uncertainty about the projection, but the trend has indeed started. I am astounded by the way in which the discussion travels so far from the content of the article. And it is always surprising to realize that people do not understand the lag time between an upturn in exploration and drilling to an upturn in production. One need not be an ardent Republican to recognize that the three years of the Obama administration is not quite enough time for a pulse of investment in new plays to pay off in barrels per day. Even Mr. Bush may not truly claim all the credit. As someone who went into geology in part in response to the first Earth Day, I think it is a slap at all those who have crafted numerous environmental laws and regulations to imply that all of these will do no good, and that it is impossible to develop oil and gas responsibly. One accident does not shut down our airlines permanently, nor should one accident, even one as egregious as the Macondo blowout, shut down this industry. The transition to a fully renewable future is likely to take generations, and good news of a surge in our energy production will need to be balanced with efforts to offset the carbon footprint of such an increase to move the world toward that future.

    #45
  46. Ian Cooper

    “North American oil production will hit a new all-time high by 2016 given the current pace of drilling in the U.S. and Canada…”

    Where have I heard that sort of talk before? Oh yeah, right after the US hit its peak in the 1970s.

    Dream on.

    #46
  47. Smudger

    On the consumme your oil or import oil point. Geopolitically it is very sensible to consume overseas oil instead of your own (particularly when you are unable to set your price of oil). The reason your oil reserves are being depleted more slowly than other countries which means that in the longer-term – when the oil price rises or countries start keeping their own oil for themselves you have the ability to fall back on you own oil reserves and increase production. wheras if you had max’d out your oil production now and so depleted your oil reserves you’d have nothing in the tank (excuse the pun!) in later years and be totally at the mercy of foriegn producers. this is the problem with the USA and its oil it produced flat-out when it was the swing producer in 1940-1970′s keeping the oil price low and building an infrastructure based on low cost oil but depleting it’s oil stocks. The fact it now only has c1.5% of global oil reserves is indicative of this. So sort-term jobs gain or long-term wealth – you decide!

    #47