US oil output hits highest level in 21 years

17 March 2013, Houston – US oil output has risen to its highest level since July 1992, according to figures by the Energy Information Administration, EIA.

The production upsurge is being propelled by unconventional plays in North Dakota and Texas.

Production rose by 0.9% or about 66,000 barrels per day to 7.2 million bpd in the week that ended 8 March, the EIA said.

It is being predicted that production could rise to as much as 7.7 million bpd by year end, bolstered by soaring volumes from the Bakken play in North Dakota and the Eagle Ford shale in Texas.

The rising production volumes are starting to take a bite out of OPEC demand forecasts. In a report published this week, the organisation said rising North American output would cut another 100,000 bpd from the forecast crude demand this year.

That would put demand 350,000 bpd below its level last year, the Wall Street Journal reported.

The newspaper estimated that if OPEC’s projections play out, and the group only pumps enough crude to meet expected demand of 29.7 million bpd, it would be supplying 33.1% of expected overall global demand in 2013, down from 35% last year and the lowest level in 11 years.

OPEC expects non-OPEC supply to grow by 1 million bpd this year, due mainly to US advances. It expects the US to produce more oil this year than in any since 1985.

Unconventional oil production still comes with uncertainty, including high rates of decline, OPEC warned.

Harsh winters in places like North Dakota can also stifle production. That state’s Department of Mineral Resources director, Lynn Helms, said on Friday that there will likely be no production increases in North Dakota until May due to ongoing bad weather and road restrictions.

Output in the state declined in both November and January because of weather.

The 738,000 bpd pumped in January was more than 4% less than the all-time high of 770,100 bpd in December.

Helms still expects North Dakota output to hit 850,000 bpd by early 2014, Reuters reported.

Overall, domestic crude output will average 7.31 million bpd this year and 7.88 million next year, the EIA said.

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