- US production expanded by 15.9 per cent in 2014
- The US produced 11.6 million barrels a day
- Saudi Arabia produced 11.5 million barrels a day
The US recorded the largest increase in oil production globally over 2014, clocking up an expansion of 15.9 per cent to 11.6 million barrels a day (b/d) and replacing Saudi Arabia as the worlds biggest producer, according to the BP statistical review of world energy.
The addition of 1.6 million b/d in the US meant that oil production in 2014 exceeded the previous peak level of output set in 1970. The US expansion was driven by the boom in shale production and made the US the first ever country to add more than one million b/d for three consecutive years.
At its height last year, more than 1,800 rigs were operating in the major US oil and gas plays, drilling about 40,000 new wells. According to BP, capital spending in the shale industry is estimated to have reached about $120bn in 2014, more than double its value five years earlier.
Speaking about the data, BPs chief executive Bob Dudley called Americas shale revolution the most significant development on the supply side in 2014.
Saudi Arabia saw an average daily production of 11.5 million barrels over the year, recording growth of 0.9 per cent compared with 2013.
The boom in US shale oil and the increase in production in Saudi Arabia helped global production increase by 2.3 per cent compared with 2013, with global daily production averaging at 88.7 million barrels.
The increase in global oil production was a key driver in the sharp decline in oil prices over 2014, according to BPs chief economist Spencer Dale.
The data for 2014 as a whole make clear that the sharp fall in oil prices was a supply story, he says. Supply growth last year was almost off the charts, with global production increasing by over 2 million b/d, more than double its 10-year average.
Middle East production
Out of all the Middle East nations, Iraq saw the biggest percentage increase in output, with its production rising by 4.6 per cent to a daily average of 3.2 million barrels.
Overall the region saw a 1.1 per cent increase in production, with an average daily production of 28.6 million barrels. In North Africa, Libya saw the biggest drop in production, with its output falling by 49.8 per cent to 498,000 b/d. Tunisian production also saw a decline, dropping by 13.3 per cent to 53,000 b/d.
Egypt posted a 0.5 per cent increase in oil production compared with 2013 as the government struggled to find a solution to the crisis that has engulfed the energy sector as demand for hydrocarbons outstrips domestic production.
In 2014, global primary energy consumption grew, but at a slower rate compared with recent years.
The increase came in at 0.9 per cent compared with the previous year, down from the 1.8 per cent increase recorded between 2012 and 2013.
The slow-down in the rate of energy consumption growth was partly driven by the rebalancing of the Chinese economy.
China, the worlds largest growth market for energy, saw its growth in energy consumption drop to its lowest rate since 1998 as industrialisation slowed and its economy shifted towards service industries and away from energy intensive sectors such as steel, iron and cement.
In 2014, Chinese GDP growth slowed to 7.4 per cent, significantly weaker than the double-digit growth rates seen in the first decade of this century.
Weakness in energy demand was not restricted to China; the EU also saw a notable 3.9 per cent decline in demand for energy.
Middle East consumption
The rate of oil consumption growth in the Middle East accelerated, rising from a 1.9 per cent increase between 2013 and 2014 to a 2.8 per cent increase between 2013 and 2014.
This was driven by a 7.3 per cent increase in consumption in Saudi Arabia, an 8.5 per cent increase in Qatar and an 8.6 per cent increase in the UAE.
Total primary energy consumption growth also accelerated in the Middle East, rising from 1.7 per cent to 4.4 per cent.
Over 2014, production of refined products surged, with US refineries leading the way. US throughputs increased by more than half a million barrels a day, the largest annual increase since the mid-1980s.
This was driven by the strength of US supplies and the consequent discounting of US crude prices, according to Dale. Global refining capacity increased by 1.3 million b/d, driven by new refineries in China, which added 790,000 b/d in capacity.
The Middle East region saw the second-biggest capacity expansion, adding 740,000 b/d. Though the world saw a significant expansion in refining capacity over 2014, much of this is not being used. Global refinery utilisation stood at 79.6 per cent in 2014, its lowest in almost 30 years.