U.S. Shores Up Shale, Becomes World’s Top Oil Producer

Oil refineries

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“The U.S. position as the largest oil supplier in the world looks to be secure for many years.” It is a statement that inspires feel good moments for proponents of energy independence, anyone who is a believer in shale drilling, or those looking to take a slice of the oil industry away from the Middle East. The statement emanates from a report by PIRA, a U.S. energy consultancy.

Bloomberg cited PIRA’s report, which attributes the rise in U.S. dominance to shale oil expansion; because of this, the U.S. will surpass Saudi Arabia this year as the leading oil producer in the world. Based on the group’s analysis, the daily production levels for the U.S. are as follows: 2.5 million barrels of natural gas; 7.4 million barrels of crude and condensate; 1 million barrels of biofuels.

The report offers further endorsement to U.S. energy production, an industry that has grown wildly thanks to shale drilling. Shale drilling — or horizontal drilling, or hydraulic fracking, whichever term suits your preference — extracts natural gas from shale rock reserves in the ground. A tremendous force of water is channeled into the rocks, breaking them apart and releasing the natural gas for capture. The report is an endorsement because it sees this industry as continuing to be a viable option for the U.S.

They aren’t alone. Last week, ratings agency Moody’s Corporation (NYSE: MCO) rated Dominion Gas Holdings, LLC, a subsidiary of Dominion Resources, Inc. (NYSE: D). In their first time rating of this company, Moody’s settled on an A3 senior unsecured rating. It based DomGas’s rating on its “well positioned, diversified asset base and stable and predictable financial profile.”

It is a stable rating to start with, and Moody’s said could be upgraded to A2 if the company preforms well. Fitch also rated the company on their scale, a BBB+. DomGas, based on Fitch’s findings, is a low-risk company with predictable cash flow.

DomGas is not involved in drilling, it transports natural gas through pipelines, and distributes it to area utility companies. It represents one aspect, of one side of natural gas production and consumption. The natural gas industry in the U.S. is important because it can create jobs beyond drilling. Jobs in companies that rating’s agencies see as stable, with potential for growth.

Expansion in U.S.-based energy production has created jobs and offers the ability for the U.S. to be an oil exporter, but don’t bust out the party hats and piñatas for a farewell party to OPEC just yet. The PIRA report, Reuters explains, has the U.S. trailing Saudi and Russian crude oil production by 3 million barrels per day.

Last December, Bankrate.com released a pro and con list for natural gas vehicles. The vehicles make up a tiny fraction of the overall U.S. car market, coming in at 120,000. Speaking with the National Journal, David Goldwyn, an independent energy analyst said that, “Our connection to the oil market buys us new political capital.” but, he added, “We’re stuck being in the Middle East for a long time to come.”

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