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EIA says growth will be from light oil As US crude production grows, Energy Information Administration looks at current, projected production by grades, areas of country Kristen Nelson Petroleum News
As U.S. crude oil production volumes grow, the majority of that growth is coming from light oils.
The historic high for U.S. crude oil production was 9.6 million barrels per day in 1970, the U.S. Energy Information Administration said in a May 29 analysis breaking its forecast down into crude types. Production has grown again recently, rising from 5.7 million bpd in 2011 to 7.4 million bpd in 2014 and is forecast to reach 9.2 million bpd in 2015.
EIA said the recent growth in domestic production is expected to peak at near that 9.6 million bpd historic high between 2017 and 2020, based on its reference case; in its high growth case, production growth would continue into the 2030s, peaking at 13.3 million bpd in 2036.
The agency said there is value is forecasting by crude type because of wide variation in the quality of different U.S. crude streams; because the economics of domestic use of additional volumes are dependent on the quality of the crude; and because actual or potential export values vary with quality of the crude.
Recent increase in light oils Of the roughly 1.8 million bpd growth in production from 2011 to 2013, 98 percent “consisted of sweet grades with API gravity of 40 or above,” EIA said, adding that its analysis indicates the growth of domestic “lighter API gravity crude will continue to outpace that of medium or heavier crudes,” with more than 60 percent of production growth forecast for 2014-15 consisting of “sweet grades with API gravity of 40 or above.”
The impact so far of additional production of light oil has primarily resulted in reduced imports of similar grades of crude oil. EIA said there was a 1.5 million bpd drop in crude oil imports between 2011 and 2013, nearly half of which was light crude with an API gravity of 35 or higher.
“Other responses to the additional production of light oil over the past several years have included additional crude exports, an increase in the average gravity of crude inputs to domestic refining, and increased refinery runs, given the recent cost advantage of U.S. refiners relative to global competitors,” EIA said.
With dwindling amounts of imported light crude available to be backed out and refinery limits, absorption of further increases in domestic production could rely heavily on continued shifts in the input mix for refineries; addition of “splitters to convert light crude into a mix of heavier fractions to feed domestic refineries and light products valued in other markets”; and continued crude oil exports, which would “depend in part on the extent of any relaxation of current export restrictions.”
The options “have implications for the value of existing refineries and specific refinery units,” EIA said, “given the substantial investments that many domestic refiners have made since the 1990s in coking capacity designed to process heavy crude.”
Data available EIA said the quality and timeliness of data available varies widely across states. The agency currently collects data on monthly natural gas production in six states and is seeking public comment on a plan to expand that to include both oil and natural gas production in 21 states. “The proposed data collection, which EIA plans to launch in 2015, would provide information on production by type,” the agency said.
It currently divides crude oil types by API gravity and by sulfur content, thus “light sweet” crude refers to grades with an API of 35 or higher and a low sulfur content; medium refers to crudes with an API from 27 to 35; heavy refers to crudes with an API of less than 27.
EIA said recent increases in domestic crude production have sparked discussion on how that production would be absorbed. The short-term forecast of domestic production by crude oil type is one of the analyses EIA is developing to respond to that question, the agency said.
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