Energy - - Mar 09,2017
After oil price war with OPEC, better technology, improved balance sheets and the Permian Basin to drive growth in US oil industry.
Ever since the oil prices started to rebound, it was expected that the US would increase its oil production. But none of us thought that this comeback would be this much faster and stronger.
The U.S. Energy Information Agency (EIA) revised its crude production forecast. Now, it predicts that the U.S. crude production would be an average of 9.21 million barrels per day in 2017, higher than the earlier forecast of 8.98 million. For 2018 output is expected to be at 9.73 million barrels a day, higher than the earlier forecast of 9.53 million.
If this happens then the US would set a record in 2018 in terms of oil production. Currently, the record is of 9.6 million barrels per day set in 1970. The comeback of the US is led by the Permian Basin, a hotbed of shale drilling in Texas and New Mexico.
Due to the efficiencies like lower prices, better technology and improved balance sheets have allowed U.S. oil companies to generate income even in today’s low oil prices.
The EIA predicts that the oil prices would not rise much above the current level of $53 a barrel. The agency estimated an average price of just $53.49 during 2017 and $56.18 during 2018.
From 2014, US companies have fought a fierce two-year price battle with OPEC. Back then, OPEC decided to continue full fledge production despite low oil prices and a supply glut. This strategy aimed at destroying the American oil companies. As oil prices dipped as low as $26 a barrel, American companies went through a wave of bankruptcies, job cuts and low oil production.
Goldman Sachs had estimated that about 170,000 oil and gas jobs were lost between 2014 and mid-2016 as many big and small companies tried to cut costs and avoid bankruptcy.
Considering the latest boom in oil industry Goldman Sachs also estimates that between 80,000 to 100,000 jobs would be added in the oil and gas by the end of 2018.