Pipe dreams must become realities if the U.S. is to regain its
place as the world's biggest oil producer in eight years, industry
insiders said Wednesday.
U.S. oil output spiked to 6.7 million barrels per day last week,
the biggest production average since May 1994, according to the
federal Energy Department. Oklahoma's crude oil numbers, meanwhile,
are reaching 15-year highs.
Some say this means that the U.S. will overtake Saudi Arabia as
the biggest producer by 2020. Others point out that American
infrastructure needs to catch up with drilling success.
"The increased production must be complemented with new pipeline
infrastructure which is necessary to transport the crude oil from
where it is produced to where it is consumed," Bruce Heine,
spokesman for Tulsa-based Magellan Midstream Partners LP, said.
"After all, pipelines are the safest, most reliable and cost-
effective mode of transportation when compared to other
alternatives."
Magellan was historically a refined petroleum pipeline and
terminal firm, bringing in gasoline, jet fuel and ethanol blending,
until 2010. The Tulsa firm is now working on two major Texas
pipeline projects, the BridgeTex and reversing the former Longhorn
line, due to be completed in the next year or two.
Natural gas infrastructure firm ONEOK Partners LP, another Tulsa-
based company, also is jumping into the crude oil business. ONEOK
Partners plans to build the 1,300-mile Bakken Crude Express to ship
oil from the Bakken Shale to Oklahoma's Cushing hub by 2015.
North Dakota's oil-rich Bakken Shale is one of the nation's
primary factors driving dreams of domestic energy independence. The
state is averaging more than 600,000 barrels per day in production.
Those kind of outputs helped cut U.S. oil imports by 11 percent
so far this year.
Oklahoma Independent Petroleum Association Chairman Bob Sullivan,
who heads Tulsa oil firm Sullivan and Co., believes the new boom is
sustainable if an economic decline does not reduce consumption and
force lower prices. He also warned against governmental and
regulatory overreach.
"In short, leave us alone in a reasonable price environment and
we will get it done," Sullivan said. "Remember, we don't have to get
to zero oil imports, but just to a low enough level where the oil we
import can come from friendly countries, and we're not far from
achieving that goal."
Oklahoma is no slouch at oil production, ranking in the top five
states behind Texas, North Dakota, Alaska and California. The Sooner
state's plays, such as the Granite Wash and Mississippi Lime, are
attracting big investments from players such as Marathon, Midstates
and Apache, among many others.
In fact, the U.S. Energy Information Administration's more recent
figures estimated Oklahoma oil production at 7.28 million barrels in
August. Those production statistics are the state's best since March
1997, according to EIA data.
The combination of horizontal drilling and hydraulic fracturing,
which set off a natural gas revolution in shale plays several years
ago, is having the same impact on oil production nationwide. Some
industry insiders, however, fret that the White House may try to
impede those practices due to environmental worries about water
quality issues.
"Our nation has a tremendous opportunity to become energy
independent as long as we have a reasonable regulatory environment,"
Heine said.
President Barack Obama has countered those worries by noting that
U.S. oil production has grown annually during his term. Most
recently, domestic crude output has risen 11 straight weeks,
according to federal reports.
Oklahoma's Monthly Oil Production Over 20 years
August 2012: 7.28 million barrels
August 2011: 6.26 million barrels
August 2007: 5.8 million barrels
August 2002: 5.61 million barrels
August 1997: 6.94 million barrels
August 1992: 8.6 million barrels
Source: U.S. Energy Information Administration
