Posted on 12/16/2013 3:47:31 PM PST by ckilmer
U.S. crude oil production will rise faster than expected to a near historic high by 2016, according to the Energy Information Administration (EIA), which sharply raised its annual output forecasts on Monday due to the breakneck speed of shale oil development.
(Excerpt) Read more at theglobeandmail.com ...
The EIA’s forecasts show that shale will help oil output in the world’s largest consumer increase by 800,000 barrels a day every year until 2016, when it will total 9.5 million b/d, just below a 1970 record of 9.6 million. It will then remain above nine million until at least 2025.
The agency’s dramatic upgrade from a peak of just 7.5 million b/d in last year’s report shows how production from tightly packed shale rock has consistently confounded analysts, as higher prices and rapidly evolving technology fuel growth.
“One thing I am sure of: The technology and prices really, really matter when you look at what the likely production numbers for oil and gas are going to be,” EIA administrator Adam Sieminski told analysts. “It’s not just trying to estimate what the resource level is in the ground.”
Just a few years ago, U.S. policy makers were considering the risks of an ever-rising dependence on imported fuel. The EIA itself made barely a mention of shale oil in its 2010 outlook, focusing rather on offshore production growth.
Now the agency is struggling to get to grips with a complete reversal of that equation. The government has begun approving more natural gas exports and may consider lifting a ban on crude oil exports.
Sieminski said the government may want to consider oil swaps with Mexico, if not a total elimination of constraints.
“They might want to look at the possibility of whether it would make some sense to allow the light sweet crude to go to refineries in Mexico that need that oil and have more sour crude coming from Mexico,” he said.
“That does require a policy decision but you can see that the trends are pushing things in that direction.”
The latest EIA forecasts may stir more anxiety from members of the Organization of Petroleum Exporting Countries (OPEC) such as Saudi Arabia, which are being forced to confront a trend they initially greeted with skepticism.
The global oil cartel said in November that it may lose 8 per cent of its market share to shale in the next five years.
The EIA on Monday said OPEC’s world market share would fall to below 40 per cent in the near term but then recover after 2016. Last year it had expected OPEC’s share to remain at 40 to 45 per cent in the coming years.
While the growth rate is far more rapid than earlier expected, the EIA maintained its view from last year that output will peak this decade and then begin to decline. The sharp decline rates of most shale oil wells has fuelled some skepticism of the long-term trend from a handful of geologists.
he EIA said the United States would be pumping 7.5 million b/d in 2040, more than last year’s 6.1 million forecast.
Higher U.S. production will also help tamp down global benchmark Brent crude oil prices, which are now expected to fall to $92 (U.S.) a barrel in 2012 prices in 2017, before rising to $141 in 2040. Last year the EIA saw a fall of $96 in 2015.
U.S. oil and gas output unexpectedly reversed a long decline after companies learned how to produce from shale rock using horizontal wells that are fractured hydraulically.
This drilling-intensive method ensures more contact between a well and a reservoir while “fracking” splits the shale rock and props up the cracks with materials such as sand to encourage oil and gas to flow into the well.
But it has also raised environmental concerns over potential water pollution and earthquakes, while the drilling costs have led analysts to repeatedly worry about a break-even price for development to continue.
The EIA raised its forecast on natural gas production, also undergoing a shale renaissance, to 31.9 trillion cubic feet (tcf) by 2025 from the 28.7 tcf it had forecast last year, and to 37.6 by 2040 against the 33.2 touted earlier.
The 2040 total annual gas production number equates to just over 100 billion cubic feet a day from around 70 bcf/d now.
While oil production will plateau after 2016 and start to gradually fall after 2020, natural gas output will increase steadily, growing 56 per cent between 2012 and 2040.
“It turns out it’s easier for natural gas molecules to squeeze their way through the [fractured] cracks than crude oil,” Sieminski said. “The resource base in terms of the level of production that it would support for gas looks better at least at this point than it does on the oil side.”
While crude oil exports remain severely limited by law, natural gas exports will continue to rise. The country will become a net natural gas exporter two years sooner than the EIA had previously judged, in 2018, and a net exporter of liquefied natural gas by 2016.
Imports of liquid fuels will fall to 25 per cent of total U.S. consumption by 2016, far lower than the EIA’s previous forecast of 34 per cent by 2019, from 40 per cent today. As oil output starts to fall, the share will increase to 32 per cent by 2040, still lower than the 37 per cent it expected a year ago.
Consumption of liquid fuels will rise to 19.3 million b/d in 2025, but then slip to 18.7 million from 18.5 million in 2012. Natural gas consumption will rise to 28.4 tcf by 2025 and to 31.6 in 2040 from 25.6 last year.
The EIA projects oil growth for 800,000 barrels @ day for each of 2014 and 2015.
I think the number will be closer to 1 million barrels a day.
But we’ll see.
IIRC, last refinery built was in 74; basically due to EPA restrictions.
There's your bottleneck.
And oh, by the way. With all this crude, keep the friggin corn in to food.
NO CRUDE FROM FOOD.........or somethin like that
This is so ironic.
Despite all the efforts of the Baraqqi regime, oil and gas is busting out all over....
Yeah, hell with that. How do we get OUT of the "global market"? We need more refineries and a similar ban on the export of finished product.
We should keep our resources for ourselves and future generations, not blow it all out of here as fast as we can.
Right. Gives one hope that we may yet survive Dear Leader.
So between now and 2020 there will be no technological advances that allow us to get more oil from old fields or find new oil or squeeze even more from unconventional sources? Who is running their crystal ball?
Beat me to it. The regulatory walls in the US need to be broken down so new refineries can be built.
TER: The price for West Texas Intermediate has been retreating for the last several months. Does that threaten the continued growth of the shale oil producers?
ES: If there’s a meaningful decline, I think you would see a reduction in capex spending. Most of these plays show favorable economics down to $60 or $50/bbl, even less than that in some cases. You just might have a pause by some players in the industry at under $80/bbl, but it would take a decline closer to $65 or $60/bbl to see any real, sustained declines in drilling budgets.
http://www.resourceinvestor.com/2013/12/16/producers-that-can-pump-at-60-bbl-oil?ref=hp
Does anyone ‘in the business’ know....can a fracked well recharge itself?
To some extent, I am equating the oil in the shale to a water table. Often, when installing underground pipes, we have to pump water out of the trench...and as long as we pump out faster than it seeps in from the sides, its dry. But if we turn the pump off, the once dry trench eventually fills in with water.
Will oil do this, more slowly? Will the oil in the areas near a fracked and depleted well eventually seep into the seams of the fracked well’s ‘influence zone’? Or is the oil in the shale truly ‘locked’ and completely unable to percolate around without the benefit of fracking.
The reason I ask...if these wells peak out in 2016, and presumably become depleted a few ears after that...can they go back to that well 20 years later and get new production out of it? If so, the estimates of rapidly diminishing production may be over-stated.
Why would we want more Mexican sour crude coming to this country?
US firms ought to build refineries along the Mexican border and pipe directly to US.
Best National Security Move we could make, bar NONE!!!
North America to Drown in Oil as Mexico Ends Monopoly
By Joe Carroll and Bradley Olson December 16, 2013
The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil fields.
Plagued by almost a decade of slumping output that has degraded Mexico’s take from a $100-a-barrel oil market, President Enrique Pena Nieto is seeking an end to the state monopoly over one of the biggest crude resources in the Western Hemisphere. The doubling in Mexican oil output that Citigroup Inc. said may result from inviting international explorers to drill would be equivalent to adding another Nigeria to world supply, or about 2.5 million barrels a day.
Refinery capacity in the toilet.
...........
Yeah the story for 20 years or so has been that the US has not added any refineries since the 1970’s-80’s.
What no one has mentioned has been that the refiners have done for decades is just add capacity to the refineries they already have—because adding capacity is much much cheaper than creating a whole new refinery from scratch.
The bottleneck now is that most of the refineries are set up for sour crude from places like venezuela. However, most of the crude coming from the baaken eagle ford, the permian basin and everywhere else is light sweet crude.
The refiners won’t build new refineries to refine the light sweet crude. Rather what they’re doing is retooling existing refineries. Because its much cheaper to do it that way.
Right now the big bottleneck is in transporting oil. There isn’t the pipeline infrastructure to handle the new oil so its being moved my rail. That adds an extra 10-12 dollars a barrel to the price of oil. But in places like the baaken, the price of oil at the well head is only about 74 dollars a barrel— so its still cost effective to ship the oil by rail to the east & west coast refineries.
Because many oil refineries are designed to run on heavy, sour crude oil. They will not run efficiently on lighter, sweeter crudes.
Warren Buffet friend of lear deeder benefits, it great to know people you know in high places....
Indian tribes in North Dakota are building a new oil refinery.
That adds an extra 10-12 dollars a barrel to the price of oil
Warren Buffet friend of lear deeder benefits, it great to know people you know in high places....
...........
I don’t think it was buffet’s relationship with Obama that resulted in such a huge windfall for the train company he bought in 2008.
But, you’re right. Its a shame he’s a democrat.
“An American Indian tribal group has received approval to take over a piece of land in oil-rich North Dakota and build a $400 million oil refinery.”
Actually it mostly cuts the well head price by that amount.
Indian tribes in North Dakota are building a new oil refinery.
.............
true. but it won’t be a large one as yet.
A groundbreaking at the $400 million refinery site may occur as soon as spring 2013, according to Three Affiliated Tribes Chairman Tex Hall. The facility, to be known as the MHA Nation Clean Fuels Refinery, will have a capacity of 13,000 barrels per day of production. Bakken crude oil will be shipped to the refinery and will be made into diesel fuel, gasoline and propane. The refinery site is located along state Highway 23, on the edge of the Fort Berthold Indian Reservation.
http://bismarcktribune.com/bakken/three-affiliated-tribes-to-get-control-of-land-for-oil/article_42150bf4-1307-11e2-b7ec-001a4bcf887a.html
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