The production increase in US crude oil has the potential to reshuffle the dynamics of global energy markets and boost investment into the country's coal, oil and natural gas sector. Mario Schnider reports.

US crude oil production reached 10.04 million barrels per day in November 2017, a level not seen since 1970, according to a February 2018 report by the US Energy Information Administration.

Rising export capacities, the potential of unexplored oil reserves and a favourable regulatory environment are combining to create a positive outlook for US crude oil producers and create new opportunities for FDI in a growing and innovative sector of the US economy.

Since 2014, greenfield foreign investment into the US’s coal, oil and natural gas sector has been tepid, decreasing to an average of 11 projects per year, compared with an average of 25 per year between 2009 and 2013, according to greenfield investment monitor fDi Markets.

The increase in US crude oil production has been largely due to more efficient drilling and hydraulic fracturing techniques, which facilitate oil extraction from shale and tight rock formations. Despite price volatility on global oil markets, where US crude temporarily traded below $50 a barrel from June to September, producers have sustained their business by reducing costs and increasing the efficiency of their operations.

The production increase coincides with the ongoing implementation of president Donald Trump’s energy strategy, which promotes hydrocarbons as way to boost economic activity. As part of the strategy, Mr Trump vowed to open up untapped oil resources in previously blocked territories in Alaska and US offshore waters.

Since the abolition of US export restrictions by the Obama administration in December 2015, exports of crude oil have continued to rise, with current figures ranging from 1.5 million to 2 million barrels of crude a day. The competitive price of US crude exerts pressure on traditional oil producers such as Russia or OPEC countries as they lose market share and their attempts to stabilise global oil prices are undermined. The surge in domestic oil production also supports efforts to reduce US dependence on foreign crude oil imports from politically unstable regions.

This article is sourced from fDi Magazine
fDi Magazine

Global greenfield investment trends

Crossborder investment monitor

fDi Markets is the only online database tracking crossborder greenfield investment covering all sectors and countries worldwide. It provides real-time monitoring of investment projects, capital investment and job creation with powerful tools to track and profile companies investing overseas.

Click here to find out more about fDi Markets

Corporate location benchmarking tool

fDi Benchmark is the only online tool to benchmark the competitiveness of countries and cities in over 50 sectors. Its comprehensive location data series covers the main cost and quality competitiveness indicators for over 300 locations around the world.

Click here to find out more about fDi Benchmark

Research report

fDi Intelligence provides customised reports and data research which deliver vital business intelligence to corporations, investment promotion agencies, economic development organisations, consulting firms and research institutions.

Find out more.