Storm effect on oil prices waning as shale booms

Drilling Ban

The six-month drilling ban in waters deeper than 500 feet (152 meters), imposed after BP’s Macondo well off Louisiana blew out April 20, 2010, was lifted in October of that year.

Shale oil has been boosting U.S. domestic production amid slower drilling in the Gulf. Total production increased to 6.36 million barrels a day in the week ended July 20, the most since February 1999, according to the department. Crude inventories rose to 387.3 million in the week ended June 15, the most since July 1990.

“A lot of the growth that we’re going to be seeing in the domestic oil production is going to be coming from onshore rather than offshore,” Adam Sieminski, the head of the Energy Department’s Energy Information Administration, said during a Bloomberg Government lunch on Aug. 22.

North Dakota

Production in North Dakota jumped to 660,000 barrels a day in June from 386,000 a year earlier, according to the department. Texas, the biggest producing state, increased to 1.9 million barrels a day, up from 1.41 million a year earlier.

“What’s happening in North Dakota is incredible,” John Felmy, chief economist at the industry-funded American Petroleum Institute, said in a phone interview. “There is no question that the industry is still committed to the Gulf.”

Imports from Canada are also reducing reliance on the Gulf. The country, the biggest oil exporter to the U.S., shipped a record of 2.52 million barrels a day to its neighbor in February, according to Energy Department data.

Bloomberg News

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