Make Strong U.S. Oil Production Stronger – To Meet Future Demand and Strengthen Energy Security

Dustin Meyer
Posted August 29, 2023

American oil production is increasing, but it needs to increase even more to meet future rising demand here at home and around the world.

Point of fact: The production growth we see today on federal lands and waters is because of investments made years ago, under previous administrations in Washington. Increasing this production for the future requires policy decisions today to help support new investment. American producers are poised to do more and need the right policies from Congress and the president.

Where things stand and where we need to go:

USA, USA – American producers deserve credit for stepping up the past 18 months to help meet global challenges – after the worst of the pandemic and in the wake of Russia’s invasion of Ukraine. The U.S. has been the leader in bringing new oil supply to market since the beginning of the Russian invasion, adding 1.33 million barrels per day (mb/d) since January 2022. This is way more new production than from any other country and more than triple OPEC+ growth.

• U.S. total crude production is averaging about 12.6 mb/d, according to the U.S. Energy Information Administration (EIA). Though still slightly below its pre-pandemic highs, production has increased. Estimates from EIA and the International Energy Agency (IEA) are that U.S. production the first half of 2023 averaged more than the first half of any previous year.
• New U.S. production (crude plus natural gas liquids) from January 2022 to April 2023 far exceeded growth from all major producers combined, according to EIA data. Meanwhile, the U.S. continues to reduce its imports of foreign oil and is a net petroleum exporter.

American leadership expected – IEA projects global demand will reach nearly 106 mb/d in 2028, an increase of 5.9 mb/d over 2022. In the same report, IEA estimates the U.S. will add another 1.3 mb/d of production growth between now and 2028 (2.6 mb/d total) – equal to the net production growth of the major producers in IEA’s chart below:

Keeping U.S. production strong is critically important to American families and businesses, the economy and American energy security. A recent Morning Consult poll found that nine in 10 voters believe it’s important to produce oil and natural gas here in the U.S. and that domestic production will help strengthen the American economy.

American production also is important to global energy markets. Recently, Saudi Arabia said it will extend its oil production cut of 1 million mb/d in September, the second time it has continued the cut since it was first announced in June. Russia also announced plans to cut oil exports, by 300,000 barrels per day, in September.

Four policies/actions needed to keep American oil production strong in the future:

1. Increase access to offshore and onshore resources – Let’s start with the need for a robust federal five-year offshore leasing program. We’ve raised flags about the Biden administration’s unlawful failure to issue a new program, now more than a year overdue, creating a leasing gap that's unprecedented in the program’s history.

Warning signs are flashing. Bud Danenberger, who worked as an engineer in the U.S. Interior Department’s offshore oil and natural gas program for nearly four decades, reported on his blog that Gulf of Mexico production has dipped the past two months and is down 10% since January.

America needs increasing production – not declining production – from the Gulf, where greenhouse gas emissions from production are lower than production from much of the rest of the world. A robust five-year offshore leasing program is essential now, and going forward.

Likewise, the administration has neglected to hold onshore lease sales in the manner required by law – leasing the fewest acres for oil and natural gas drilling than any other administration in its early stages since the end of World War II.

Combined, the administration’s level of inactivity in fostering new leasing and development is a serious blow to the nation’s future ability to produce the energy it needs.

2. Support infrastructure with additional permitting reforms – American infrastructure projects – including needed pipelines, natural gas terminals and other facilities – take too long to move through Washington’s broken system of reviewing and permitting. While there was some progress in the bipartisan debt-ceiling deal earlier this year, much more reform is needed.

Specifically, we need to modernize the National Environmental Policy Act, under which environmental impact analyses have averaged 4.5 years in duration and more than 600 pages in length. Reforms are needed to fix broken processes without respect to different kinds of infrastructure so that the marketplace picks winners instead of Washington.

3. Pick the best ways to reduce methane emissions – API supports federal regulation of methane, yet EPA’s proposed rule falls short of the most effective approaches to reducing these emissions. Oil and natural gas companies have been pursuing these avenues with strong results through initiatives such as The Environmental Partnership.

Unfortunately, the Biden administration has not worked closely enough with our industry to reduce emissions – and even chose not to invite industry representatives to take part in its recent “methane summit.” API President and CEO Mike Sommers wrote recently:

“Despite the natural gas and oil industry’s investment in advanced methane detection technologies and on-the-ground operational changes to reduce emissions, this administration is full speed ahead with a rigid approach that doesn’t reflect the realities of production or the necessity of working with industry to craft a workable rule. The rule would presume that bureaucrats know more about reducing methane emissions than workers and experts already in the field. Collaboration is the better bet.”

4. Washington should refrain from a regulatory chokehold on energy growth – By the time 2023 is done, API expects to directly engage in more than 40 significant federal rulemakings affecting oil and natural gas development across all aspects of the value chain.

Noted above is the lay of the land on methane regulation. In this, industry is a willing partner with Washington, but regulation must make sense, be cost-effective and technologically feasible.

API supports regulatory oversight. But duplicative, cumbersome red tape that bind things up for months and years, generating uncertainty that stifles investment, must be changed to prevent regulatory bottlenecking that harms needed energy development.

The natural gas and oil industry has demonstrated its deep commitment to developing reliable, affordable energy safely, efficiently and through ever-cleaner operations. Strong American production is essential to Americans’ way of life and their security in the world – today and tomorrow.