This photo shows the Gulf Intracoastal Waterway West Closure Complex, Saturday, July 13, 2019 in Belle Chasse, La. It is the largest pumping station in the world. (AP Photo/Matthew Hinton)
ASSOCIATED PRESS
Domestic U.S. crude oil production tanked by 700,000 barrels of oil per day (bopd) during the week ended July 19, according to the U.S. Energy Information Administration (EIA), and hardly anyone noticed. Gasoline prices didn’t spike – they actually dropped slightly – refiners didn’t experience shortages of feedstock, no interstate pipelines had to be shut in due to pressure issues linked to lack of line fill.
When Hurricane Katrina churned up the Gulf of Mexico in late August/early September, 2005, all of these issues and more resulted from about 1 million bopd being knocked off-line. But when Hurricane Barry mandated the shutting-in of most producing platforms in the Gulf this year, the impacts to the country were barely noticeable. What this shows us is just one of the many ways the shale oil revolution over the last decade has enhanced the nation’s economy and national security.
It’s not hard to see why.
During the week before Katrina slammed into the Louisiana coast, total U.S. oil production was just 5.4 million bopd ; thus, the million-barrel drop in production represented about 20% of the nation’s total crude supply. That supply doesn’t just come back online the day after the hurricane passes. It normally takes a period of weeks for production to fully be restored to all the shut-in platforms in the Gulf. When those platforms produce 1 out of every 5 barrels for the entire country, the impacts can be severe.
Contrast that event to the situation today, in which total U.S. production for the week ended June 12 was pegged by the EIA to have been 12.0 million bopd, more than double the level for August, 2005. The 700,000 bopd loss of shut-in production in the Gulf amounted to just 5.7% of the nation’s total production.
The difference between the impacts of the two hurricane events spaced 14 years apart is fully attributable to the revolution in shale oil production that has taken place during those intervening years. While the production of natural gas from shale formations like the Barnett Shale in North Texas goes back more than 20 years now, it’s important to remember that, in 2005, oil production from shale was near zero. Production of crude from shale in earnest really began in late 2008, with the first successful well completed in the Eagle Ford Shale in South Texas.
According to the EIA, during 2018 oil produced from shale amounted to 59% of overall U.S. production . What that means is that production from conventional formations in the U.S. has remained basically static, and the rise from 5.4 million bopd to ~12 million bopd today is completely due to the ability to produce oil from shale, enabled by the wedding of horizontal drilling to hydraulic fracturing.
It’s not just oil – shale has produced the same positive impacts for the country where natural gas is concerned as well. Barely a decade ago, a major Gulf of Mexico hurricane event like Barry would have created regional shortages of natural gas and significant price spikes, because natural gas production from the Gulf represented a similarly significant portion of overall U.S. supply. But during the week of July 19, the NYMEX natural gas price actually dropped as the amazing abundance of onshore shale gas continued to overwhelm domestic demand.
This new stability in the face of major weather events is just one of many ways the abundant supply of energy provided by massive U.S. shale formations continue to enhance our national security and daily lives.
