The US States That Produce the Most Oil

The US States That Produce the Most Oil

A boom in oil production is profoundly changing the U.S. economy and impacting worldwide energy markets. As of 2015, 90% of U.S. oil production, excluding federal offshore drilling, comes from eight states: Texas, North Dakota, California, Alaska, New Mexico, Oklahoma, Colorado and Wyoming. The surge in U.S. output is due in large part to the wide use of horizontal hydraulic fracturing, or fracking, as new technologies give drillers access to some of the largest oil deposits in the world that were once too tight to exploit. Fracking is controversial as some believe the chemicals injected into the wells lead to extensive pollution of the water supply. Some also argue the unconventional horizontal drilling awakens dormant faults, causing earthquakes.



With domestic crude oil production averaging 9.4 million barrels a day over the first six months of 2015, the United States bypassed Russia and Saudi Arabia as the world’s largest producer of crude oil. This increased production is attracting manufacturers back to the U.S. Producing 90% of the energy it consumed in 2014, the U.S. imported less foreign oil every year from 2005 to 2015. Investors looking to get into the domestic energy markets may want to pay attention to shale drillers such as Exxon Mobil Corporation and Chesapeake Energy Corporation, which spent about $120 billion in 2014 in the U.S., more than double the amount spent five years earlier.

Texas

While other states have seen a boom in recent years, Texas is still the epicenter of the U.S. oil industry, with 27 operable refineries, more than any state. Texas produced 1.2 billion barrels of oil in 2014, which accounted for 36% of total U.S. output, and the state has almost one-third of all proven oil reserves with 10.5 billion barrels. If Texas were its own country, it would be the sixth-largest oil producer in the world. With increasing horizontal drilling of the state’s Eagle Ford Shale and Permian Basin, Texas is ramping up production, averaging 3.6 million barrels a day in 2015, up from 3.1 million in 2014. For those looking to invest in Texas, Exxon and Houston-based AT&T, Inc. are a good start.

North Dakota

The North Dakota oil boom is completely transforming the western portion of the state, which rests atop the Bakken Shale formation and the Williston Basin, two of the largest oil reserves in the world. Companies such as Whiting Petroleum Corporation, Continental Resources, Inc. and Hess Corporation are among the largest players in the region making these deposits profitable with the technological advancements in fracking. With oil production increasing by 1,000% between 2003 and 2015, North Dakota has 5.7 billion barrels of proven reserves and produced 397 million barrels in 2014. When combined with output from Texas, the two states provide half the entire U.S. oil output.

California

Excluding federal offshore areas, California ranked third in the nation in crude oil production with over 200 million barrels in 2014. Despite an overall decline in production since the mid-1980s, California has 2.9 billion in proven reserves, behind only Texas and North Dakota. California ranks third in the nation in petroleum refining capacity and accounts for more than one-tenth of the total U.S. capacity. To meet strict federal and state environmental regulations, California refineries are configured to produce cleaner fuels, and they often operate at or near maximum capacity because of the high demand for these petroleum products.

Alaska

While oil production has slowed in recent years in response to enhanced exploration and drilling in the plains, Alaska is still one of the largest oil-producing states with 181 million barrels of output and 2.9 billion barrels in reserve in 2014. The North Slope contains more than a dozen of the largest oil fields in the U.S. Although production has fallen to less than 300,000 barrels per day from its peak of 1.6 million barrels per day in 1988, the region is still one of the most profitable for ConocoPhillips Co.

Oklahoma

Production in Oklahoma has more than doubled since 2005 to more than 128 million barrels in 2014, pushing its way into the top five of the most productive oil-producing states. Oklahoma is the intersection of many of the largest national pipelines. The small city of Cushing is home to the world’s largest oil storage facility, where one-fifth of the country’s commercial crude oil is stored and where the primary U.S. oil price, known as West Texas Intermediate, is determined. Oklahoma City-based Continental Resources, Inc. has a leading presence in the Anadarko Woodford play, and Oklahoma is actively expanding its shale operation throughout the plains.

New Mexico

Thanks to horizontal drilling, primarily in Lee and Eddy counties in the southeastern part of the state, New Mexico’s oil production has more than doubled since 2009, seeing an incredible 30% jump from 2012 to 2013 alone. By producing 124 million barrels in 2014 and with 1.2 billion barrels in reserve, oil production is clearly one of the most important drivers of the state’s economy. This region comprises a confluence of conventional formations and newer shale formations that are shared with Texas' Permian basin region.

Colorado

While other states may get more publicity about the booming oil industry, Colorado has seen a dramatic increase with production tripling from just 30 million barrels in 2009 to over 94 million in 2014, or about one of every 50 barrels of U.S. output. New production is coming from the Niobrara Shale formation in the Denver-Julesburg Basin in northeastern Colorado. With experts estimating that approximately 2 billion barrels of oil are recoverable from the Niobrara, Colorado’s oil reserves of 896 million barrels are sure to increase.

Wyoming

Thirty-nine percent of U.S. coal comes from Wyoming and is the focus of the state’s energy industry, but oil production continues to increase thanks to ongoing drilling of the Niobrara Shale formation. Wyoming produced 760 million barrels in 2014, with 723 million barrels in reserve. EOG Resources, Inc. is one of the most aggressive drillers in the region with plans to expand with hundreds of new wells.

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