North America appears headed for an oil renaissance, with crude production expected to hit an all-time high by 2016, given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week.

U.S. oil production in areas including West Texas' Permian Basin, South Texas' Eagle Ford shale, and North Dakota's Bakken shale will record a rise of a little over 2 million barrels per day from 2010 to 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects.

Canadian crude production is expected to grow by 971,000 barrels per day during the same period, with much of the oil headed for the U.S.

Combined, the U.S. and Canadian oil output will top 11.5 million barrels per day, which is even more than their combined peak in 1972.

Goldman Sachs has estimated the U.S. could move from being the No. 3 oil producer behind Saudi Arabia and Russia to the No. 1 spot by 2017.

It's a reversal of the steady downward production trend that started after 1971, when U.S. oil production peaked around 9.5 million barrels per day.

And the pace of production now has caught quite a few people by surprise, says Joseph Pratt, a historian at the University of Houston who has written extensively about the oil and gas industry.

"We have this momentum out there to set about doing what we said we wanted to do back in the 1970s: reduce the flow of imports from volatile regions," Pratt said. "It was like the Holy Grail back then. And suddenly it seems possible."

The surge is fueled by the same drilling and production techniques that opened up natural gas production in recent years - the combination of horizontal drilling and hydraulic fracturing - as well as the success of deep-water Gulf of Mexico projects and the ramp-up of Canadian oil sands projects.

The natural gas glut has kept its price low, prompting producers to focus more effort on oil and natural gas liquids, which fetch better prices.

Earlier this year, the number of land and offshore oil rigs working in the U.S. exceeded the number of natural gas rigs for the first time in 18 years, according to data compiled by IHS-CERA.

And Texas oil and gas industry employment returned to its pre-recession highs in June, according to the Texas Petroleum Index, topping the last boom that peaked in October 2008, thanks largely to oil drilling.

The oil boom has plenty of economic upside potential. IHS-CERA predicts oil production could directly and indirectly generate another 1.3 million U.S. jobs over the next decade and raise an additional $97 billion in federal taxes and royalty payments.

But plenty of people are concerned about the other costs that might come with more oil production.

The proposed Keystone XL pipeline, a major project to bring Canadian oil sands to U.S. Gulf Coast refineries, has become a rallying point for environmentalists, with hundreds arrested during a sit-in in front of the White House several weeks ago.

And the Environmental Protection Agency is moving forward with new rules aimed at tighter controls on emissions from oil and gas drilling, production and transportation.

The industry contends the proposed rules put a costly burden on a job-creating industry at a time when the country needs jobs.

But Daniel Weiss, a senior fellow at the Center for American Progress, a liberal-leaning think tank, said the industry is far from being hobbled financially. He noted that the five oil majors - Exxon Mobil, Shell, BP, Chevron and ConocoPhillips - have reported $67 billion in 2011 profits and are sitting on $60 billion in cash. Yet they have cut more jobs than they've created in recent years and spent billions buying back their own stock, Weiss said.

Pratt predicted that tensions among the resurgent oil industry, community groups and environmental groups - heightened by last year's Deepwater Horizon accident and oil spill - will continue.

The conflict was manifest in public hearings Monday in Port Arthur, where federal officials took comments on the Keystone XL pipeline project, Pratt said.

"The first 25 speakers were union workers and locals saying they needed the jobs the pipeline would bring. Then the bus from Houston pulled up, and the environmental groups spoke about how it's the filthiest oil in the world," Pratt said.

"All of them had passion about their point of view, but there are questions of fairness and justice and economics that we just don't know how to talk about."

tom.fowler@chron.com

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