U.S. Crude Oil Fundamentals

Posted Dec 8 2011 by breitling in 

Production of crude oil from United States reserves has been in decline by an annual average of nearly 2.4% since 1985. Production of 273 million barrels in 1985 has since been reduced to 150 million barrels in 2008 – this has been a reduction of nearly 45% in the past 24 years.

US Crude Oil Facts:

  1. In the first quarter of 2007, oil drilling reached a 21 year high in the US. And, yet, overall domestic production continues to decline.
  2. U.S. consumes approximately 20,500,000 barrels per day of Crude Oil & Petroleum Products.
  3. US Crude oil production is 5,564,000 barrel per day.
  4. US Crude oil imports are 10,031,000 barrels per day.
  5. The US imports 58.2% of its total oil consumption.
  6. The top two importers of oil to the US are Canada and Mexico.
  7. The US gets 60% of its imports from OPEC countries.
  8. The proven reserves of Crude Oil in the US are 20,972 million barrels.

Importing the majority of needed crude oil into the United States has, for quite some time, been the reality. However, each year that percentage of imports increases by over 4.7%. In 1985, the United States imported nearly 117 million barrels of crude oil, by 2008 that number has increased to over 3.5 billion barrels. Overall, the United States has increased their dependency on foreign crude oil by more than 206% in the past two and a half decades.

Many industry experts believe that 2011 is a very good year to acquire domestic natural gas production. Breitling Royalties is buying lots of natural gas royalties currently and remains bullish on its long term pricing models.  Pricing is lower than it has been in a number of years, yet demand and supply are off slightly from the levels they have been at in the past 5 years. Low pricing is greatly affected by the uncertainty in the US economy and a slight excess in natural gas inventories. Looking at key statistical data shows that this imbalance will soon be overcome and pricing will move back to appropriate levels in the near future, especially when the US economy begins to recover. In the short term, it looks like natural gas will be priced relatively low, making it potentially one of the best times in history to buy producing natural gas assets.

Some Key Facts on Natural Gas:

    1. In the last 10 years, over 90% of the new electric capacity built in the US has been from Natural Gas fired generation.
    2. Natural Gas now accounts for approximately 20% of the energy used to create electricity in the US and will account for 50+% by 2035 thanks to the shale gas revolution.
    3. Approximately 84% of Natural gas used in the US is produced domestically.
    4. Only 2% of Natural Gas used in the US comes from overseas.
    5. Natural Gas heats more homes in the US than all other energy sources combined.
The Obama administration pledged to have the US in a position that we will require no oil imports for our energy needs in 10 years. That will make domestic, clean burning, Natural Gas a highly important source to reach that goal.

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