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Today in Energy

April 27, 2011

Domestic oil production reversed decades-long decline in 2009 and 2010

Source: U.S. Energy Information Administration

Following declines in all but one year from 1986 to 2008, U.S. oil production (crude oil and lease condensate) increased in 2009 and again in 2010. Due in part to Hurricanes Ike and Gustav, average annual production dipped below 5.0 million barrels per day (MMbbl/d) in 2008, then climbed to 5.4 MMbbl/d in 2009 and 5.5 MMbbl/d in 2010, with 2010 volumes representing an 11% increase over 2008.

Source: U.S. Energy Information Administration

While much of the increase in 2009 was associated with deepwater developments in the Federal Gulf of Mexico, the increase in 2010 was led by escalating horizontal drilling programs in U.S. shale plays, notably the North Dakota section of the Bakken formation.

Operators drilling at the Bakken and other shale formations are combining horizontal wells and hydraulic fracturing - the same technologies used to significantly increase shale gas production - to boost oil production. Horizontal drilling has become especially important as oil prices have risen considerably. According to Baker Hughes rig count data, horizontal rigs comprised less than one-third of oil-directed rigs in September 2008, the previous overall rig count peak. With a tripling of horizontal oil rigs since then, that share has increased to about 46%. For further information, please see today's edition of This Week in Petroleum.