The triumphant USA is now producing more oil and gas than any nation ever has

That ability to increase per-well performance through the application of more effective processes and advancing technologies has been crucial to the ability to raise overall production given that the upward curve has continued even in the face of an active rig count that has dropped by over 25 per cent in the past 15 months. That is a feat the US industry has never achieved in any other period in modern times. 

The September 2023 record took place exactly 15 years after American crude production had hit a production nadir not seen since 1943, when the manpower and resource requirements of fighting World War II slowed the business to a crawl. The US churned out just 3,974,000 bpd in September 2008, a level the State of Texas alone exceeded by almost 2 million bpd 15 years later.  

Those were the days before the shale revolution kicked off in earnest. Indeed, it was the very next month, October, 2008, when the first successful horizontal oil well was drilled in the Eagle Ford Shale formation in South Texas. Management at the company that drilled that first well, Petrohawk Energy, thought they were drilling for dry natural gas. Imagine their surprise when the light brown sweet oil began flowing up the pipe along with the gas stream.  

Two years later, drillers were completing successful horizontal wells in the first of many productive shale formations in the Permian Basin of West Texas. By 2012, production from Texas, which had amounted to just a little more than 1 million bpd in 2008, had risen to 3 million bpd. In November 2023, Texas produced 5,657,000 bpd, and would rank as the 4^th biggest producing nation on earth if it were a standalone country.

These numbers are stunning, and they are coming in the face of a President, Joe Biden, and an administration that continues to invoke federal regulations and executive orders designed to impede the industry’s ability to grow. So, other than advancing technology and human ingenuity, how do we account for this ongoing expansion of America’s energy might?

It can be explained through the convergence of several key factors:

Firstly, a confluence of ideal geology and geography. Through an extremely fortunate accident of history, it turns out that the most productive shale formations happen to lie beneath regions in which the federal government owns little or no land. Two of the most prolific regions – the Eagle Ford and Permian Basin – lie all or mostly in Texas, where the feds own virtually no land at all outside of military bases and Lake Falcon, which is fed by the Rio Grande River on the border with Mexico. This means that the Texas state government exercises virtually all operational regulatory authority related to oil and gas operations in the state. The prolific Bakken Shale is mainly contained in North Dakota, and the DJ Basin is in central Colorado, where the feds own only a relatively small percentage of the land. 

Second, America is fortunate in its law. Simply put, no US president has much ability to regulate the domestic industry’s operations unless they take place on lands owned by the federal government. As a result, the Biden administration – like the Obama administration before it – has been left to try to impede the industry at the margins, using such ploys as slow-playing approvals for interstate pipelines and the recent halt in permitting for new LNG export facilities. The EPA is also trying to slow it down with a multitude of new regulations on methane and auto emissions. 

Third, a timely law signed by Barack Obama. He probably didn’t really realize it at the time, but former President Barack Obama essentially issued a full speed ahead order in December 2015, when he signed an omnibus spending bill into law that contained language repealing a 1975 ban on exports of US crude oil. This repeal came at a time when some producers were finding it difficult to find space in any domestic oil refinery to process the light, sweet grade of oil being produced from US shale, since most of the refineries were equipped to refine heavy grades of crude coming from overseas. This new ability to export crude for refining overseas basically gave a green light for further expansion of US shale regions. 

Today, America ranks as the largest producer of both oil and natural gas on Earth, and there is no sign that is likely to change anytime soon given that the industry is conducting its business more efficiently and effectively than at any time in history. As a result, the USA enjoys almost complete energy security: we have no need for oil and gas from unsavoury regimes overseas, and we even have enough left over to help supply our friends – such as Britain. This could change if voters decide to award Biden a second term in November, giving his regulators four more years to invoke even more onerous roadblocks to growth. 

But even that seems doubtful. If the history of the oil and gas industry has taught us nothing else, it is that markets and human ingenuity seem to always find ways to overcome attempts by politicians and regulators to pick winners and losers.

David Blackmon had a 40 year career in the US energy industry, the last 23 years of which were spent in the public policy arena, managing regulatory and legislative issues for various companies. He continues to write and podcast on energy matters