In October, two historical markers will be reached. One, it will have been 40 years ago that the Arab Oil Embargo of 1973 occurred. Today, a generation later, oil from unconventional and tight sands has tipped the scales in a new direction and we are much less vulnerable—which leads me to the second historic event. Possibly in October, US oil production will exceed oil imports for the first time since 1995, according to the US Energy Information Administration's Short Term Energy Outlook (STEO).

The 1973 embargo was instituted by some Arab producers in response to the United States' military support of Israel, after Egypt and Syria attacked Israel. Middle Eastern oil supply was reduced, global oil prices rose and President Richard Nixon imposed price controls.

Lasting until the following March 1974, the embargo forced US drivers to wait in line, sometimes for hours, to buy gasoline. Energy policy-makers around the world took notice of how their nations' economies were threatened by being crude-import-dependent. This vulnerability was a position that China's leadership has been doing something about ever since through a series of acquisitions and joint ventures around the world.

US oil production is resurgent, and world leaders have taken notice. Output from tight-oil and shale formations could take current production of about 7.5 million barrels a day on up another notch, adding some 7 million more daily barrels beyond the 2011 output level—in other words, a huge double in two years.

Today, Texas alone produces about 1.6 million barrels a day, or about 30% of US production. By year-end 2014, Bakken shale production in North Dakota is expected to hit 1 million barrels a day. It's above 840,000 a day now. The Eagle Ford shale and the many stacked pays of the prolific Permian Basin are in a race to see which region produces the most.

Leaders in both the Soviet Union and Saudi Arabia have publicly noted this production surge. While Vladimir Putin has pooh-poohed US shale activity—particularly in natural gas—one prominent Saudi has given in to the obvious and warned his fellow leaders.

It was disclosed in late July that in May of this year, Saudi prince and international investor Alwaleed bin Talal (a nephew of King Abdullah), wrote a letter to the energy minister, Ali al-Naimi, and to other ministers, warning them of the impact that US oil production would have. “…rising North American shale production is an inevitable threat,” he said.

Texas Railroad Commissioner Christi Craddick spoke about this at a conference in Chicago recently. She said, “If production numbers, economic value and job growth are not enough, the Saudi Prince Alwaleed bin Talal wrote in concern to Saudi government leaders…cautioning them that fracing in America will reduce American dependency on Saudi oil.

“For almost 50 years, OPEC has manipulated oil markets, holding the United States captive to their supply-and price-setting whims…”

No longer.

Second-quarter results from some of the most active unconventional-oil producers continue to highlight the huge promise, which is still unfolding. Concho Resources announced 37% quarter-over-quarter growth in oil production from its horizontal Delaware Basin activity, now the Midland company's largest core area, according to a round-up report from Raymond James & Associates.

Bakken leader Continental Resources raised its 2013 production guidance to an expected 38% to 40% growth per year; and said its Singer well in Oklahoma's emerging SCOOP play posted an initial potential (IP) rate of 1,915 barrels of oil equivalent per day.

EOG Resources also raised its 2013 crude oil production guidance, to a gain of 35% year-over-year (vs. 28% previously); and the company announced an outstanding Eagle Ford well that had an IP of about 9,200 BOE per day (90% liquids).

In Pioneer Natural Resources' northern Midland Basin Wolfcamp wells, the IPs are trending higher than expected, and the EURs (estimated ultimate recoveries) could be up to 1 million BOE per well. When you think of all the acreage Pioneer has under its belt, and the thousands of locations, you get the idea. Its compound annual growth rate from 2012 to 2015 is predicted to be 13% to 18%.

Future US shale drilling and development will require as much as $70 billion per year for the next 30 years, according to a study by Jefferies & Co. In nine shale plays, some 364,900 wells could be drilled (the study did not include Permian wells).

“From the start of 2007 through the end of 2012…the oil and natural gas industry increased [job creation] by more than 162,000 jobs, a 40% increase,” says the EIA. 'Nuff said.

For much more on US oil excitement, we'll see you at the DUG Eagle Ford Conference on Sept. 17-19 in San Antonio. For more on the Permian Basin, join us at the Executive Oil Conference in Midland on Oct. 15. And, for our newest conference, Crude in Motion, join us in Houston October 30.

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