U.S. oil production surged last week to the highest level since January 1997, reducing the country’s dependence on imported fuels as new technology unlocks crude trapped in shale formations.
Crude output rose by 3.7 percent to 6.509 million barrels a day in the week ended Sept. 21, the Energy Department reported today. America met 83 percent of its energy needs in the first six months of the year, department data show. If the trend continues through 2012, it will be the highest level of self-sufficiency since 1991. Imports have declined 3.2 percent from the same period a year earlier.
A combination of horizontal drilling and hydraulic fracturing, or fracking, has helped reduce America’s reliance on foreign oil. The same technology unleashed a boom in natural gas output from shale that pushed inventories to a record last year.
“This has been driven by shale, and the two states leading the way are North Dakota and Texas,” said Andy Lipow, president of Lipow Oil Associates LLC, an energy consulting firm in Houston. “It appears that over the next five years, U.S. oil production could climb to well over 8 million barrels a day.”
Oil fell $1.39 a barrel, or 1.5 percent, to settle at $89.98 on the New York Mercantile Exchange. Futures have retreated 9.1 percent since reaching $99 on Sept. 14, the highest settlement in four months.
Crude prices are set to decline over the next six to nine months because of rising production from the U.S., David Martin, an analyst at JPMorgan Chase & Co., said at a Sept. 20 conference in London.
A natural gas stockpile surplus helped push futures down to a decade low of $1.907 per million British thermal units in April. Supplies have reached record levels in each of the past three years, Energy Department data show. Inventories are 8.6 percent higher than the five-year average.
Citigroup Inc. estimated in a March report that resurgent U.S. energy supplies could lead to a “reindustrialization” of America that could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.