U.S. Energy Production Future

Written By Brianna Panzica

Posted December 8, 2012

U.S. oil production was at an all-time high nearly 42 years ago, when it peaked at 9.6 million barrels per day in 1970.

Back then, we could have given Saudi Arabia a run for its money.

As they say, history repeats itself… and here we are, about to come full circle.

Now, I’m not saying this will happen overnight; while Saudi Arabia is currently pumping 9.4 million barrels of crude each day, we’re producing only a fraction of that.

But we are where we were, say, in the mid-1950s.

We’ve got our eye on the target — and we’re gaining momentum.

Energy Producer

The EIA released data this week showing the U.S. pumped 6.5 million barrels a day in September — more than we have since 1998.

The downward trend we’ve seen since 1985 bottomed out in 2008…

Oil Production History

And now there’s nowhere to go but up.

In fact, the latest Annual Energy Outlook pointed to nothing but good things for the U.S. energy market.

Energy production will grow faster than consumption. From exports to alternative energy to fuel economy, everything’s set to improve. That, of course, includes oil production.

Those 6.5 million barrels per day was 5.6 million bpd just last year. By 2019, production will reach 7.5 million bpd.

Domestic energy improvements also include how we’ll use natural gas…

Commercial fleets are switching over to natural gas vehicles — using either CNG or LNG — and reducing their diesel consumption.

This will be driven further once Clean Energy Fuels Corp. (NASDAQ: CLNE) completes the network of natural gas fueling stations it’s building along major trucking highways throughout the country.

LNG exports are slated to begin as soon as 2016. So far, Cheniere Energy (NYSE: LNG) is the only company to have been granted approval for its LNG export facility, which will be located at the Sabine Pass import terminal in Louisiana.

A whole wave of applications are on the table. The government has yet to make any decisions, but they’re getting closer.

Net Exporter

The long-awaited analysis of natural gas exports on the U.S. economy came out this week.

It showed — in every one of the 63 situations it analyzed — “net economic benefits” to the domestic economy.

It’s still going to be a lengthy process. There will be two months open to public comment, after which officials will examine and decide on each proposal, one by one. And they’ve been adamant about the fact that this in no way guarantees a future of exports.

But let’s be honest; lawmakers wouldn’t really deny something that’s been guaranteed to have a net economic benefit. They just want to keep us in suspense.

The Energy Outlook estimates we’ll be a net exporter of LNG as soon as 2016. Total natural gas (including via pipelines) will follow in 2020.

Natural gas exports will happen.

We’re heading for the fiscal cliff, which everyone fears will be a trigger for economic collapse. Our leaders have been looking for is a “net economic benefit.” And allow me to underscore the fact that exporting natural gas will put us up against energy leaders like Russia, just as pumping more oil is putting us up against major players like Saudi Arabia.

Our shale deposits are far from dry. They’ve got a lot to offer — and the world is catching on.

Good Investing,

Brianna Panzica
for Energy and Capital

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