According to Kurt Barrow, vice president of midstream and downstream oil markets for IHS Markit, in order to understand current levels of U.S. oil production, it's important to put it in context.
"The U.S. tight oil phenomenon has been quite extraordinary, and it has been talked about a lot," Barrow said. "It's been important not just for the U.S., but also for the global oil markets."
In many ways, the U.S. has provided the majority of the growth in crude supply over the past several years, Barrow explained.
"Essentially, about half of the growth has come from the U.S. since 2013," he said. "The other half has come from what we call the 'Gulf Five': Saudi Arabia, Iran, Iraq, Kuwait and the United Arab Emirates."
"If you look forward to the next five years, the U.S. is really it," Barrow continued, speaking at the Gulf Coast Industry Forum held recently in Pasadena, Texas. "The U.S. is such a phenomenal powerhouse that we think it provides the majority of new growth that's required going forward over the next five years or so."
Barrow said he and his IHS colleagues foresee U.S. crude oil growing to approximately 16 million bpd by 2025, though it may stabilize at that level.
"Still, there are a lot of resources in the rock," Barrow said. "The treadmill that we're getting on is quite extraordinary."
Though he anticipates U.S. oil production's overall growth to decelerate after 2020, Barrow said the Permian Basin remains the core driver in the near term.
"The Permian is the primary success story here," he said. "There are a lot of resources up in the Bakken, there are resources in the Niobrara Basin, but the most prolific and most economic [resources] are in the Permian right now, and that's where the independent producers are putting in a lot of their activity and drilling efforts."
The U.S. crude oil and gas industry is also creating economic benefits not limited to Texas and the Gulf Coast, Barrow said.
"Those benefits really go beyond Texas, North Dakota or Louisiana," he said. "When we did work for the 'Crude Oil Export' study a couple of years ago with our IHS economics team, we found that the supply chains are long and real, and they go to all states in the union."
Manufacturers in the Midwest are benefitting from the investments and activities happening in and around Houston, he said, though "that's not well understood by the common man."
"It's not well understood by many of our own families either, so we've got to continue to get the message out," Barrow added.
U.S. efficiency unmatched
As he travels the world and talks with leaders in the industry, Barrow said he continues to find the U.S. one of the most efficient countries with some of the most effective businesses, even though the cost structure is higher.
The salaries for engineers, welders or similar crafts workers, and the ability for industry leaders to make business decisions in the U.S., he said, are particularly laudable.
"Efficiency is the capital of employment, and the reactivity to price signals here in the U.S., be it in the wellheads or in plant investments, is pretty extraordinary and is not matched," Barrow said. "The Chinese do a lot, and they do it quite fast, but they're not particularly efficient. There's a lot of wasted capital in a lot of instances."
Barrow said he anticipates global energy demand will go through a transition to lower carbon levels.
"We will see policies that continue to work to decarbonize the energy mix," he predicted. "All that said, in our view -- even in our most optimistic view of foreign policy and technology advances in decarbonization, and even in those more extreme scenarios -- hydrocarbons have to continue to play a central role to meet the world's energy needs."
