It’s a volatile industry. Wars in the Middle East can instantly squelch supply. Discoveries of new oil deposits can suddenly shift the balance of power. Changing regulations and new technologies can immediately transform the outlook of the industry. It’s definitely a business you have to stay on top of.
One of the biggest headlines this fall involved an expected boom in US oil production. Some experts predict that by 2020, the US will become the largest oil producer in the world, exceeding even Russia and Saudi Arabia.
It’s interesting news, especially given the fact that for many years people have decried the US’s dependence on foreign oil. There a number of reasons why oil production in the US is growing. Here are four of the most important:
Tapping More Difficult Sources
The primary reason for the growth of US oil production is our recently developed ability to extract oil from places that were previously off limits. We can now drill sideways into long layers of shale and other rocks that have oil. With these new technologies, sources of oil that were once too expensive or difficult to exploit can now be tapped.
High Prices Mean High Resources
As you probably have noticed at the gas pump, oil prices have been high for a while. While this has been bad for you, it’s been good for the oil drillers. It has given them the money and incentive to invest in more OCTG casings and tubes, to develop new processes for extracting oil and to drill in new places to find it. Without these resources, drillers may have never developed the techniques or found the new deposits that will increase US production.
The Gulf Has Recovered
Production flagged after the devastating spill in 2010, but drilling in the Gulf of Mexico has picked up again. Large deposits have been discovered there recently as well, meaning the growth will likely continue.
Too Much Natural Gas
A surplus of natural gas has compelled drillers to decrease their exploration for it. The equipment that was being used for that exploration is now being used for oil drilling.
Those are some of the major reasons why experts predict a dramatic increase in US oil production. But given the volatility of the oil industry, it’s an outcome that’s far from certain. And as a leader in OCTG sales, we’ll definitely continue to pay close attention.
What do you think? Will the US become number one in oil production?