Last year was a historic one for the global oil industry. Records that many once viewed as set in stone were not only broken in 2018 but broken by a wide margin. Meanwhile, a goal once seen as a pipe dream briefly became a reality. Add those once-unthinkable feats to the industry's other accomplishments and many will remember 2018 as a landmark year for the sector.
Smashing a 48-year-old mark
America's oil production last peaked in 1970 at an average of 9.6 million barrels per day (BPD). The country's oil output went downhill from there, declining steadily for years until oil companies figured out how to exploit America's vast shale resources in the last decade. That led to a stunning reversal in the country's oil output. By November 2017, U.S. oil production had nearly eclipsed the previous monthly peak of 10.044 million BPD set in November 1970.
Last year, however, America's oil industry obliterated both records as it produced an average of 10.9 million BPD, according to the U.S. Energy Information Administration (EIA). That vaulted the U.S. to the top of the leaderboard as the largest oil producer in the world over the final few months of 2018, ahead of both Saudi Arabia and Russia.
A high-octane growth rate
Overall, America's oil output expanded by 1.6 million BPD in 2018, which was the largest volume growth in the country's history, according to the EIA. Driving that big uptick in volume was the ability of U.S. oil producers to drill gusher after gusher.
Oil producers Marathon Oil (NYSE:MRO) and Devon Energy (NYSE:DVN) were both on pace to exceed their lofty expectations heading into the year by drilling a string of record-setting wells. Marathon Oil, for example, initially expected that it would grow its U.S. oil production by 20% to 25% last year. However, it was on pace to expand it by 30% to 34% thanks in part to record-setting well results in the Bakken shale. Devon Energy, meanwhile, was on track to grow its U.S. oil production 17% last year, up from its initial guidance of a 15% increase. Among that catalyst fueling Devon's faster-than-expected production growth was the fact it drilled the two biggest wells in the 100-year history of the prolific Delaware Basin as well as several monster wells in the STACK shale play of Oklahoma.
Check out the latest Devon Energy earnings call transcript.
Achieving the American dream (if only for a brief moment)
One of the dreams for America over the years has been to end its addiction to foreign oil. That finally happened last year as the country was a net exporter of oil for the first time in history during the final week of November. Overall, the country exported 3.2 million BPD of oil that week along with another 5.8 million BPD of petroleum products, which was 20,000 BPD more than what it imported.
U.S. crude oil exports appear poised to continue rising in the coming years as oil supplies keep growing -- with the EIA estimating that they'll top 12.9 million BPD next year -- and the country builds more docking capacity. That puts America on pace to be a net exporter of oil by 2020, which would technically make the country energy independent.
Global oil demand tops triple digits
Last year's record oil supplies from the U.S. coincided with a historic year for oil demand, which hit 100 million BPD during the fourth quarter, according to the International Energy Agency (IEA). Overall, global oil output averaged an estimated 99.2 million BPD for the year, which was about 1.3 million BPD ahead of 2017's record level. What's noteworthy about this number is that the industry was able to rise to the occasion and meet this need with ease. The IEA sees even higher oil demand in 2019, with it recently forecasting that it will expand by another 1.4 million BPD to an average of 100.6 million BPD for the year, assuming the global economy doesn't slow down due to the current trade dispute between the U.S. and China.
Expect more records in 2019
America's oil industry did things last year that few would have ever thought was possible not that long ago, as it not only smashed 1970's production record but turned the country into a net oil exporter. That's transforming the country into a dominant force in the oil patch, which will only become more apparent in the coming years as production and export volumes continue expanding. That makes it an exciting time for investors as it opens unique opportunities to cash in on the U.S. oil boom.