As of October 2005, the US economy continued to expand, with 2005 real growth in gross domestic product (GDP) running at about 3.5 percent. This follows real GDP growth of 4.2 percent in 2004. The U.S. unemployment rate was estimated at 5.0 percent in October, down slightly from 5.1 percent in September, with the economy creating 56,000 net jobs during the month.
For 2005, the U.S. merchandise trade deficit is expected to total $782 billion, up from $665 billion in 2004. The current account deficit now is running at about 6.6 percent of GDP, compared to 1.5 percent in 1995. The U.S. budget deficit was $319 billion in fiscal year (FY) 2005, down from $412 billion in FY 2004. Despite the deficits, the dollar has generally appreciated against several major currencies, including the Euro and the Japanese Yen, during 2005.
According to EIAs 2004 Annual Report on U.S. oil and natural gas reserves, the United States had 21.4 billion barrels of proved oil reserves as of December 31, 2004, the eleventh highest in the world. These reserves were concentrated overwhelmingly (over 80 percent) in four states. Texas had 22 percent of total US oil reserves, Louisiana had 20 percent, Alaska 20 percent, and California 18 percent (note: all of these figures include onshore plus Federal and state offshore reserves). U.S. proven oil reserves have declined more than 17 percent since 1990, with the largest single-year decline (1.6 billion barrels) occurring in 1991.
U.S. crude oil production, which declined following the oil price collapse of late 1985/early 1986, leveled off in the mid-1990s, and began falling again following the sharp decline in oil prices of late 1997/early 1998. During 2004, the United States produced around 7.6 million barrels per day (bbl/d) of oil, of which 5.4 million bbl/d was crude oil, 1.8 million bbl/d was natural gas liquids and 0.4 million bbl/d was other liquids. This compares to the 10.6 million bbl/d averaged during 1985. U.S. crude oil production, which averaged 5.4 million bbl/d during the first eight months of 2005, is now at 50-year lows.
The United States contains over 500,000 producing oil wells, the vast majority of which are considered "marginal" or "stripper" wells, generally producing only a few barrels per day of oil. During 2004, top oil producing areas included the Gulf of Mexico (1.5 million bbl/d), Texas onshore (1.1 million bbl/d), Alaskas North Slope (886,000 bbl/d), California (656,000 bbl/d), Louisiana onshore (228,000 bbl/d), New Mexico (176,000 bbl/d), Oklahoma (171,000 bbl/d), and Wyoming (141,000 bbl/d).
EIA expects that lower-48 States oil production in 2005 will decline by 340,000 bbl/d from 2004 levels, to 4.17 million bbl/d. For 2006, an increase of 400,000 bbl/d is expected. Much of the 2005 reduction and 2006 rebound is due to the disruption and subsequent recovery of production in the Gulf of Mexico.
Generally speaking, Lower-48 onshore production, particularly in Texas, has been falling in recent years, while offshore (mainly Gulf of Mexico) production has been rising. For 2005, prior to Hurricanes Katrina and Rita in August and September, Gulf of Mexico oil production had been expected to increase as new fields came online in late 2003 and 2004 (e.g., the southern Green Canyon deepwater area). By late 2005, the Mars, Mad Dog, Ursa, Thunder Horse and Nakika Federal Offshore fields had been expected to account for about 12 percent of Lower-48 oil production. Now, with the impacts of Hurricanes Katrina and Rita, this outlook has been thrown into question.
As of November 10, 2005, 46.7 percent of the Gulf of Mexicos 1.5 million bbl/d crude oil production capacity remained offline, with 39.8 percent of the areas 10 billion cubic feet per day (Bcf/d) of natural gas production capacity also down. EIA currently expects about 23 percent of the Gulfs crude oil production and 21 percent of its natural gas output to remain shut down through March 2006. Overall, through November 14, Hurricanes Katrina and Rita had caused a loss of nearly 86 million barrels of U.S. crude oil output, and over 440 Bcf of natural gas output. In addition, around 804,000 on bbl/d of crude refining capacity remained offline as of November 9.
The destructive 2005 hurricane season came as the Gulf of Mexico had just about fully recovered from Hurricane Ivan in late September 2004. That storm had also caused significant disruptions to Gulf of Mexico operations, with 102 pipelines affected and 27 platforms either destroyed or badly damaged. According to an assessment by the U.S Department of Interiors Minerals Management Service (MMS), "Of the 4,000 structures and 33,000 miles of pipelines in the gulf....150 platforms and 10,000 miles of pipelines were in the direct path of Hurricane Ivan"
Meanwhile, Alaskan oil production is expected to decrease by 30,000 bbl/d in 2005 and by 20,000 bbl/d in 2006, to 860,000 bbl/d. This continues a steady decline since the states peak output of 2.02 million bbl/d in 1988. For the period January-August 2005, Alaska averaged production of about 872,000 bbl/d of oil, or about 16 percent of total U.S. crude oil production. Over 400,000 bbl/d of Alaskas oil output comes from the giant Prudhoe Bay Field (major producers include BP, ExxonMobil, and ConocoPhillips), and is transported via the 800-mile Alyeska (Trans-Alaska) pipeline. An oilfield known as Alpine, owned 78 percent by ConocoPhillips and 22 percent by Anadarko, began production in November 2000. Alpine represents one of the largest North American onshore oil discoveries in years, producing around 63,000 bbl/d of high quality, light crude oil in 2004. Production at Alpine is to be maintained using tie-ins to the Nanuq and Fiord satellite fields beginning in late 2006. ConocoPhillips has been the largest oil producer in Alaska since acquiring Arcos Alaska fields in early 2000. The combined crude oil production rate from ConocoPhillips Greater Kuparak and Western North Slope areas averaged about 156,000 bbl/d in 2004. ConocoPhillips also produced about 142,000 bbl/d at Prudhoe Bay.
In March 2004, the Energy Information Administration (EIA), in response to a Congressional request, issued an analysis of potential oil reserves and production from the Arctic National Wildlife Refuge (ANWR). The report projected that for the mean resource case (10.4 billion barrels technically recoverable, according to the U.S Geological Survey), ANWR peak production rates could range from 0.6 to 1.6 million bbl/d, with initial ANWR production possibly beginning around 2013, and peak production possible around 2024.
In recent years, production from deepwater areas of the Gulf of Mexico has been increasing rapidly, with deepwater wells now accounting for about two-thirds of total U.S. Gulf output. Large fields include ExxonMobils $1.1 billion Hoover-Diana development (which started up in May 2000 and was producing 80,000 bbl/d by 2002), plus: 1) BPs $2.5 billion Atlantis project, scheduled to come online in the third quarter of 2006, with 150,000 bbl/d of peak oil production capacity; 2) BPs 1-billion-barrel Thunder Horse (previously "Crazy Horse") field, the largest single field ever discovered in the Gulf of Mexico, which came online in January 2005, with peak oil output of 250,000 bbl/d expected; 3) Crosby (developed by Shell, came online in late 2001, peak output of 60,000 bbl/d); 4) Holstein (BP; online in 2004); 5) King (BP); 6) Kings Peak (BP); 7) Mad Dog (BHP Billiton; online in early 2005); 8) Marlin (BP); and 9) Nakika (Shell and BP; first production in December 2003; ramping up to 110,000 bbl/d) fields. For its part, BP has stated that it plans to accelerate its deepwater Gulf of Mexico production plans, including the planned $1 billion "Mardi Gras" deep-sea pipeline system, designed to transport more than 1 million bbl/d of oil.
In June 2003, Unocal announced its intentions to build a $500 million deepwater crude oil port, the Bulk Oil Offshore Transfer System (BOOTS) in the Gulf of Mexico 100 miles south of Beaumont, TX. The BOOTS system would have a capacity of 1.2 million bbl/d, and would be linked to refineries in Houston/Texas City, Beaumont/Port Arthur, and Lake Charles. As of October 2004, however, Unocal had placed BOOTS development on hold "pending receipt of sufficient volume commitments from crude oil import shippers."
According to Baker Hughes Inc., which has tallied weekly U.S. drilling activity since 1940, domestic oil and natural gas drilling rebounded sharply from the low point of 488 reached in late April 1999, following the oil price collapse of late 1997. In mid-2001, for instance, the U.S. weekly "rig count" approached the 1,300 mark. After that, the U.S. "rig count" fell, reaching 843 as of mid-October 2002, before rising once again, reaching 1,479 during the week ending November 11, 2005. As of November 11, natural gas rigs outnumbered oil rigs in the United States more than five-fold (1,232 to 241).
Historically, U.S. drilling activity peaked in 1981, with a total of 91,553 wells (43,598 oil, 20,166 natural gas, 27,789 dry wells) drilled in that year. For 2004, a total of 33,813 wells (22,673 natural gas wells, 7,167 oil wells, and 3,973 dry wells) were drilled in the United States, up from the low point of 18,465 total wells drilled in 1999, and also up sharply from the 25,744 wells drilled in 2002. During January-September 2005, total U.S. oil and natural gas wells drilled were up 21 percent from the same period in 2004.