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.