The 10 Most Oil-Rich States

July 13, 2015 by 247alexkent

Oil well silhouette on sunset
Source: Thinkstock

Oil well silhouette on sunset

Oil futures fell last week, the biggest weekly decline since March, after the U.S. Energy Information Administration (EIA) said that U.S. oil and gas inventories unexpectedly rose the week before. Further, even as the EIA raised U.S. crude oil production forecasts for 2015 and 2016, the International Energy Agency warned that an oversaturated market may drive oil prices down further. The weakness in prices could have a profound effect on some states that rely on oil production.

Based on data from the EIA, the 10 states with the most proven oil reserves accounted for more than 80% of total U.S. reserves in 2013. Texas, the state with the most proven reserves, had nearly 10.5 billion barrels, nearly double the reserves of North Dakota, the state with the second most reserves. These are the most oil rich states in the country.

Click here to see the 10 most oil-rich states.

Unsurprisingly, the states with the highest totals of proven reserves are also among the largest oil producing states. Together, these 10 states produced nearly 2.5 billion barrels of oil in 2014, or 77% of the nation’s total production that year. Offshore drilling, not attributable to any state, accounted for much of the rest of the production.

Technological advancements in horizontal drilling and hydraulic fracturing, commonly called fracking, have allowed oil companies to access shale formations that were previously unreachable. The Permian Basin in Texas, for example, was believed to have run dry in the early 2000s. New technologies, however, have revived the region and the Permian Basin is now the country’s leading oil producing region.

Extensions — or newly accessible reserves that are attributed to previously existing oil fields — are one way to increase proven reserves. In 2013, extensions contained roughly 4.4 billion barrels of oil across the country, nearly all of which located in the 10 most oil-rich states. Additionally, nearly the entire increase in proven reserves in 2013 was from extensions.

As a result of the oil boom in these states, jobs in the mining and logging sector, which includes oil and gas extraction, have increased. In six of these states, employment in the sector grew by more than 60% from 2005 through 2014, higher than the 42% increase in sector employment across the country.

GDP growth is another way to measure the vitality of a state’s economy. While the U.S. economy grew by 2.2% in 2013, the GDP of seven of the states with the most reserves grew by more than 2.5%, largely driven by the mining industry. In Wyoming, for example, 3.5 percentage points of the state’s 5.1% GDP growth came from the mining sector. Texas, North Dakota, Oklahoma, and Colorado received a similar boost from the booming oil industry.

The existence of oil in a state does not guarantee economic success, however. Alaska and California both had among the highest unemployment rates in the country despite having the nation’s third and fourth most proven reserves, respectively.

To identify the most oil-rich states, 24/7 Wall St. reviewed data on proved oil reserves from the Energy Information Administration (EIA). Reserves figures are as of December 31, 2013, the most recent date for which data are available. We also looked at the changes in proved reserves since 2000. Also from the EIA, we considered extensions to existing oil fields, new field discoveries, the number of refineries, and total crude oil production. We examined trends in each data point beginning in 2000. We also looked at unemployment rates, and employment and labor force levels from the Bureau of Labor Statistics. GDP growth and industry contribution to growth came from the Bureau of Economic Analysis and are for 2013.

These are the 10 most oil-rich states.

10. Louisiana
> Proved oil reserves:
503 million barrels
> Total crude oil production: 68 million barrels (9th highest)
> Number of operating refineries: 19 (2nd most)
> Unemployment rate: 6.4% (18th highest)

Louisiana’s proven oil reserves totaled 503 million barrels, up 8.6% from the year before and the 10th most in the country. Hydraulic fracturing, often referred to as fracking, was likely a factor in the state’s increased proven reserves. In fact, while no new fields were discovered in Louisiana in 2013, extensions — newly accessible reserves that are attributed to an existing oil field — contributed 47 million barrels of oil to the state’s proven reserves, the ninth most in the country. Despite identifying new reserves, however, the state’s oil production fell 4.5% in 2013 and is down 35% since 2000. By contrast, oil production across the country is up nearly 50% since 2000.

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9. Utah
> Proved oil reserves:
613 million barrels
> Total crude oil production: 40 million barrels (11th highest)
> Number of operating refineries: 5 (tied-5th most)
> Unemployment rate: 3.8% (4th lowest)

Utah’s proven oil reserves were unchanged in 2013 at 613 million barrels, despite adding 46 million barrels of oil through extensions. However, the state’s production of crude oil has increased more than 160% since 2000, significantly higher than the 50% increase in production nationwide. Advances in oil extraction from shale may dramatically increase the state’s oil reserves in the future. The Green River Formation, a shale deposit under Utah, Colorado, and Wyoming, contains roughly 3 trillion barrels of oil. If even half of the oil shale in the Green River Formation is recoverable, a consistent estimate among analysts, the oil field would double the world’s proven oil reserves.

8. Wyoming
> Proved oil reserves:
723 million barrels
> Total crude oil production: 76 million barrels (8th highest)
> Number of operating refineries: 6 (4th most)
> Unemployment rate: 4.3% (8th lowest)

Roughly one in 10 workers in Wyoming were employed in the mining and logging industry, the highest share of any state in the country. High employment in the industry may be due to the state’s rapid energy sector growth. In 2013, Wyoming’s GDP grew 5.1%, of which 3.5 percentage points were attributed to the mining sector, the second largest contribution from that sector in the country. In 2013, 100 million barrels were added to the state’s proven reserves from extensions of existing fields, the sixth most in the country. The state’s oil production has grown steadily in the last five years, increasing at a compounded annual rate of 8.1%, just lower than the 10.3% nationwide growth.

7. Colorado
> Proved oil reserves:
890 million barrels
> Total crude oil production: 95 million barrels (7th highest)
> Number of operating refineries: 2 (tied-17th most)
> Unemployment rate: 5.0% (15th lowest)

Five new oil field discoveries in 2012 and 400 million barrels of extensions in 2012 and 2013 more than doubled Colorado’s proven reserves to 896 million barrels, the seventh most in the country. Colorado’s Wattenberg oil field is the fourth largest in the country by proven reserves. From 2000 through 2014, oil production in Colorado increased 415%, the third highest increase in the country over that time. Over the same period, the share of the state’s workforce employed in mining and logging more than doubled to 1.4%, the 10th largest share in the country.

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6. Oklahoma
> Proved oil reserves:
1.0 billion barrels
> Total crude oil production: 124 million barrels (5th highest)
> Number of operating refineries: 5 (tied-5th most)
> Unemployment rate: 4.5% (12th lowest)

Oklahoma’s proven reserves increased 67% from 2000 through 2013, the sixth highest growth in the country. Recent growth in proven reserves has been driven by extensions to existing fields, which contributed nearly 700 million barrels from 2011 through 2013, one of the largest increases in the country in that time. Since 2009, state crude oil production has increased 86.5%, one of the larger increases in the country. Increased oil production also helped drive economic growth in Oklahoma in 2013, contributing to more than half of the state’s 2.8% GDP growth rate. The strong performance from the state’s energy sector may have helped lower the unemployment rate to 4.5%, below the national rate of 6.2%.

5. New Mexico
> Proved oil reserves:
1.2 billion barrels
> Total crude oil production: 123 million barrels (6th highest)
> Number of operating refineries: 2 (tied-17th most)
> Unemployment rate: 6.5% (15th highest)

From 2008 through 2013, New Mexico’s proven oil reserves increased by more than 500 million barrels, or 79%, to 1.2 billion barrels, the fifth most in the country. The increases in reserves is likely attributable to fracking and horizontal drilling, which can help put previously unusable oil fields in play. In fact, extensions have contributed roughly 600 million barrels of oil to the state’s reserves in the five years ending in 2013. Increasing reserves and crude oil production have also led to a growing mining and logging industry. From 2005 through 2014, the share of the state’s labor force employed in that sector increased 1.5 percentage points, or more than 10,000 jobs.

4. California
> Proved oil reserves:
2.9 billion barrels
> Total crude oil production: 204 million barrels (3rd highest)
> Number of operating refineries: 17 (3rd most)
> Unemployment rate: 7.5% (4th highest)

California’s proven oil reserves fell by nearly 25% from 2000 through 2013, one of only two of the most oil-rich states that did not increase its proven reserves over that period. Still, because of the state’s size, proven reserves totalled more than 2.9 billion barrels, fourth-most in the country. Relative to other states, California’s oil production is also quite high, at roughly 2 million barrels per year, the third highest production level in the country. The state is home to 15 of the nation’s largest oil fields, which accounted for more than 80% of the state’s oil production in 2013. Only 0.2% of the state’s labor force was employed in mining and logging as of 2014, by the far the lowest share of employment in that sector among oil-rich states.

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3. Alaska
> Proved oil reserves:
2.9 billion barrels
> Total crude oil production: 181 million barrels (4th highest)
> Number of operating refineries: 5 (tied-5th most)
> Unemployment rate: 6.8% (10th highest)

Like in California, proven oil reserves in Alaska are declining, falling 40.4% from 2000 through 2013, including a 13.1% decline in 2012. Alaska’s mining industry, which began contracting as the oil boom hit the lower 48 states, was one factor contributing to the state’s negative GDP growth rate. The industry dragged Alaska’s overall GDP down 1.84 percentage points in 2013, making it one of just two states with negative GDP growth figures that year. Nonetheless, with nearly 3 billion barrels of proven reserves, Alaska is home to some of the largest oil fields in the country. Together, the Prudhoe Bay and Kuparuk River fields, the third and sixth largest fields by proven reserves, accounted for nearly 60% of the state’s total oil production of 188 million barrels in 2013. And while just 0.6% of the nation’s workforce was employed in the mining and logging sector, 5.3% of Alaska’s labor force was employed in that sector, the third largest share in the country.

2. North Dakota
> Proved oil reserves:
5.7 billion barrels
> Total crude oil production: 396 million barrels (2nd highest)
> Number of operating refineries: 1 (24th most)
> Unemployment rate: 2.8% (the lowest)

Home to the Bakken shale formation, North Dakota is the archetype of the recent U.S. oil boom. From 2000 through 2013, proven oil reserves increased by more than 2,000%, from 270 million barrels to 5.7 billion barrels. And while only four new oil fields discovered in 2013, compared to the 29 fields discovered in 2010, the state still had the highest number of new field discoveries in the country. New oil discoveries have also helped create jobs in the state. Since 2001, North Dakota’s unemployment rate has risen above 4% only once, and the share of the labor force employed in mining and logging has grown from roughly 1% to 6.5%. Additionally, the state had the country’s highest GDP growth rate of 6.3%, of which 2.5 percentage points came from the mining industry.

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1. Texas
> Proved oil reserves:
10.5 billion barrels
> Total crude oil production: 1.2 billion barrels (the highest)
> Number of operating refineries: 26 (the most)
> Unemployment rate: 5.1% (16th lowest)

With more than 10 billion barrels, Texas had the most proven oil reserves of any state in the country. Extensions to existing fields, as well as the discovery of new fields, including in the Eagle Ford Shale in 2009, helped Texas double its proven reserves since 2000. And while geologists first discovered the Permian Basin in the late 19th century, it was not until recent advances in production technology that oil companies could extract oil from the basin’s shale. As of March 2013, the Permian Basin was the largest oil producing region in the country. In addition to having the most proven reserves, Texas also produced the most oil in the country. The state produced 1.2 billion barrels of oil in 2014, a third of all U.S. crude oil production that year.