Industry analysts predicted that the United States’ oil production would level out in summer 2018. Instead, the end of summer saw the largest increase in oil production in nearly 100 years, and the Permian Basin led the charge. Now, the Organization of the Petroleum Exporting Countries (OPEC) is facing the possibility that West Texas has shifted the world’s energy economy.
In a recent article, Bloomberg reported the United States will become a net oil exporter for the first time in 75 years. For the first time since the Truman administration, the United States will export more oil than it imports—even if only for a moment. By December of 2019, the nation will only import about 320,000 barrels of oil each day, the lowest number seen since 1949.
Officials from Saudi Arabia and OPEC have acknowledged that significant change is on the horizon, and they must now answer the looming questions brought by American production.
What Is Fueling the Boom?
Unprecedented oil production in the Permian Basin is the primary source of booming energy production in the United States. Since the discovery of vast stores in West Texas, companies have drilled more than 114,000 wells. The only thing holding them back? Transportation. Exporters managed to defy earlier reports of a flattening in the US oil market by utilizing every form of transportation possible to ship product. Companies are utilizing trains and trucks to overcome the limitations of the region’s pipelines. However, multiple pipelines will open in 2019 and 2020, allowing more oil to travel to ports in Corpus Christi and Baytown.
Other global events are disrupting the world’s oil economy. Decreased output in Venezuela and Iran has left openings in global demand that Saudi Arabian and Russian are working to fill. Shale from the United States remains the great unknown. Despite barrel prices dipping to $30, United States shale has managed to remain profitable, defying the market.
What the Future Holds for OPEC
OPEC created the problem it now faces. In 2014, OPEC flooded the oil market. When oil prices crashed, drillers in West Texas shrank operations. However, as the market rebounded, so did drilling in the Permian Basin. American companies used the opportunity to increase production and fill holes that emerged in the economy.
“The Permian will continue to grow, and OPEC needs to learn to live with it” – Mike Loya of Americas for Vitol Group
Initially unphased by growth, Saudi officials are now paying attention to West Texas. The sleeping oil giant is threatening their main source of profit and, if things continue this way, they will be forced to find new ways to thrive in an increasingly hostile market.
Our Permian Basin lawyers have protected workers in West Texas since the earliest days of the shale boom, and we will continue to do so. If you have been injured while working in the Permian Basin, call today for a free consultation at (888) 493-1629.