The ongoing shale oil boom continues to surprise even the experts.
When the U.S. Energy Information Administration released its 2013 Energy Outlook just three months ago, the government predicted domestic oil production would continue its shale-backed rally until 2019, when it would peak at 7.5 million barrels per day.
So much for that.
Domestic oil producers last month recovered about 8 million barrels per day as tight oil production continued to far outpace estimates, EIA Administrator Adam Sieminski said last week at the University of Oklahoma Energy Symposium.
“This is changing very rapidly,” he said.
Even with the surging production, Sieminski and the EIA are reluctant to predict indefinite growth.
“Does this mean it will keep going up, or does it mean the resource base might not still be defined?” Sieminski asked. “I think the jury is still out, but there are a lot of smart people who believe these numbers will just keep going up.”
The EIA on Tuesday released its March 2013 Short-Term Energy Outlook, which was revised to reflect higher-than-expected November and December numbers, but still does not match current production.
The revised forecast projects domestic crude production averaging 7.3 million barrels per day in 2013 and 7.9 million barrels per day in 2014.
The new number is 5 percent higher next year than the original forecast expected in six years, but it still lags what Sieminski said the country is producing today.
The faster-than-expected oil production increase also is leading to tumbling imports, reducing the country's dependence on oil from outside of North America.
“Higher U.S. oil production means America will need less imported oil,” Sieminski said Tuesday.
“After reaching a record 60 percent of domestic oil demand in 2005, net oil imports next year are forecast to fall to 32 percent of consumption, the lowest level since 1985,” he said.
The turnaround is remarkable. In seven years, U.S. producers have reversed more than four decades of production declines.
While the government is reluctant to predict long-term growth, some producers have no problems making such forecasts.
Oklahoma City-based Continental Resources Inc. has been the leading developer of the Bakken field in North Dakota and Montana.
The field has been the fastest-growing oil patch in the world for the past four years.
In 2007, natural gas was selling for more than $10 per thousand cubic feet and most industry players were scrambling to find more dry gas. Even then Continental CEO Harold Hamm told me to keep an eye on domestic oil.
“Over the past 25 years, oil has had a better intrinsic value than natural gas,” Hamm said in the August 2007 interview. “It is the only fuel we have for transportation, even today. A lot of people have the concept that we can't find oil here in the U.S. There is a lot of oil to be found, but there aren't many people focusing on it.”