U.S. Seen as Biggest Oil Producer After Overtaking Saudi.

http://www.bloomberg.com/news/2014-07-04/u-s-seen-as-biggest-oil-producer-after-overtaking-saudi.html

The U.S. overtook Saudi Arabia and Russia to become the world’s biggest producer of oil as extraction of energy from shale rock strengthens the nation’s economy, Bank of America Corp. said.

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. TheInternational Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.

“America is now the world’s leading producer of oil and gas,” Francisco Blanch, the bank’s head of commodities research in New York, said in the report. “The American shale revolution has had a transformational effect on the U.S. and global economies in recent years. Low energy prices are a key edge of the U.S. economy.”

Oil extraction is soaring at shale formations in Texas and North Dakota as companies split apart rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking.

OPEC Unrest

U.S. oil output will surge to 13.1 million barrels a day in 2019 and plateau thereafter, according to the IEA, a Paris-based adviser to 29 energy-consuming nations. The nation will lose its top-producer ranking at the start of the 2030s, the agency said in its World Energy Outlook in November.

Rising U.S. oil supplies come as an Islamist insurgency threatens output in Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia. Territorial gains in northern Iraq by a group calling itself the Islamic State has spurred concerns that oil flows from the south could be disrupted. Exports from Libya have been disrupted by protests, while Nigeria’s production is crimped by oil theft and sabotage.

Fracking is used in states from North Dakota to Pennsylvania, helping push U.S. natural gas production to new highs in each of the past seven years, according to the U.S. Energy Information Administration. Annual investment in oil and gas in the U.S. is at a record $200 billion, reaching 20 percent of the country’s total private fixed-structure spending for the first time, Blanch said.

An oil drilling rig stands on the Bakken formation in Watford City, North Dakota.