The latest piece of news around the U.S. oil market is that in October 2013, domestic production exceeded oil imports for the first time since 1995. Made possible as a direct result of the hydraulic fracturing – or fracking – boom, this turning point is just the latest in a series of events that have marked a major transition in the U.S. energy industry.
The past few months have seen three milestones that few Americans would have anticipated in 2008 when domestic oil production was at its lowest point since 1946. Together, these three events are reshaping the world energy market:
- In September, China surpassed the U.S. as the world's largest importer of oil as reported by the U.S. Energy Information Administration (EIA).
- In October, the U.S. surpassed Saudi Arabia to become the world's largest oil producer according to the PIRA Energy Group.
- Announced by the EIA in November, U.S. oil production surpassed imports in October for the first time since 1995.
Sources of the U.S. energy production boom
While the Obama administration was quick to claim some responsibility for these achievements, the fact is that none of this would have been possible without several initiatives coming together to achieve similar ends. While the president's emphasis on diversifying the country's energy profile and reducing consumption has contributed to these events, the primary driver is undoubtedly the proliferation of hydraulic fracturing techniques.
In addition to increasing yield from wells, hydraulic fracturing techniques enable oil and gas companies to extract resources that were previously unattainable. The process revolves around horizontal drilling techniques. By injecting a mixture of water, chemicals and proppants into rock formations deep within the earth, the formations are broken up, allowing oil and gas to escape to the surface.
While fracking is best known for its use in natural gas extraction, the technology is easily translated for use in oil production. Today, many oil wells are fracked using the same general technology in their operations.
The promise of U.S. energy independence
Energy independence has been a buzzword for decades, and until recently was thought to be in the realm of pipe dreams. However, there have been several reports published by the likes of CitiGroup and the International Energy Agency in the past year suggesting that the United States will be a net exporter of energy by the year 2020.
As the U.S. energy industry continues to increase production, the predictions made by these groups are appearing to be even more credible than when they were first released. In any event, 2013 has seen a series of events pertaining to U.S. energy production that are sure to be remembered.