U.S. crude oil production has been rising in recent years following a decline from 9 million barrels per day (bbl/d) in 1985 to 5 million bbl/d in 2008 (Figure 1). Production was 6.5 million bbl/d in 2012 and EIA's latest Short-Term Energy Outlook forecasts production of 8.2 million bbl/d by the end of 2014, driven by the continued rapid pace of tight oil development that almost exclusively produces light crude.
While long-term projections are inherently uncertain, reflecting assumptions about hydrocarbon resources as well as advances in technology, U.S. crude production in the High Oil and Gas Resource case of EIA's Annual Energy Outlook 2013 averages 10 million bbl/d over the 2020 to 2040 period (Figure 2), with light grades of crude oil providing the bulk of output growth.
Some recent commentary has suggested that it was likely or even inevitable that the growth in U.S. oil production from tight resources would be significantly curtailed unless there was a relaxation of current U.S. policies toward crude oil exports. However, this is likely an overstatement of the actual situation, because there are several other midstream and downstream adjustments that could help to accommodate changing production patterns.
The growing supply of domestic light crude oil in the mid-continent that has traditionally moved through the Cushing, Oklahoma, market hub has already prompted both midstream and downstream changes. Pipelines like Seaway that were once used to carry imported oil up from Gulf Coast ports to reach Midwest refiners have been reversed and are moving inland crude oil down to the Gulf, and their capacity is being dramatically expanded. New pipeline infrastructure is also under construction, including the southern portion of the Keystone XL project, which is slated to be in operation by year-end, and more has been proposed.
There have also been major developments in rail transport, where shipments of crude increased dramatically in 2012 compared to 2011. Rail is generally more costly than pipelines for crude oil transport, but unit train loading and unloading facilities, which can often be built quickly and without many regulatory hurdles, can help to narrow the gap between rail and pipeline shipment costs. Rail also can provide greater flexibility in destination points. For example, while most of the major pipelines that are under discussion focus on linking inland crude streams with the U.S. Gulf Coast, home to about half of the nation's refining capacity, some of the less-complex refineries on the East Coast and in the Northwest that have historically run imported light sweet crude provide attractive opportunities for switching to domestic light tight oil. Rail shipments to take advantage of these opportunities have already begun, and are likely to increase significantly in the near future.