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Cures for U.S. oil supply concerns New study points to 30% hike in world volumes, debunking other claims; Canadian pipeline plans lend weight to chances of relief By Gary Park For Petroleum News
Roiled by the loss of supply from Alaska, growing instability in the Middle East and an uncertain hurricane season, there isn’t much cause for comfort in today’s U.S. domestic oil markets.
But the future is not without hope.
A fresh study by Cambridge Energy Research Associates challenges the doom-and-gloom forecasters by contending that global supply can keep growing for decades.
Based on an evaluation of 360 new projects the energy consultant says volumes can increase to 110 million barrels per day by 2015, up 25 million bpd from current output, although it cautions that what is achievable geologically can be derailed by geopolitical upheavals.
The Alaska disruption has again turned attention to the Alberta oil sands, where output is expected to triple to 3.3 million bpd by 2015 and could reach 4.5 million bpd according to some scenarios.
No immediate relief is possible from Canada, with fields, pipelines and refineries operating at capacity. Pipelines fully booked The pipeline network is fully booked through September and even if extreme measures were taken Canada could make only a dent in the 400,000 bpd reduction in Alaska supplies.
CERA’s analysis shows new projects and a revival in exploration could push Saudi Arabian output to 12.5 million bpd from 10 million bpd, testing the widely publicized claims of Houston-based investment banker Matthew Simons that the kingdom is headed for a rapid decline.
CERA’s estimate of 3.5 million bpd from the oil sands by 2015 represents about 12 percent of the total growth projected by the firm. Pipeline projects in the works That gains added credence from the number of pipeline projects in the works.
Kinder Morgan Canada expects to complete a 15 percent, 35,000 bpd addition to its Trans Mountain Pipeline from Edmonton to the Vancouver area and Washington state — where refiners have been taking greater volumes of Canadian grades to diversify their feedstocks — by mid-2007 and is seeking National Energy Board approval to add another 40,000 bpd in 2008, raising the system’s capacity to 300,000 bpd.
Further expansions could build Kinder Morgan’s capacity to 1.1 million bpd, the company estimates.
Enbridge has even grander ambitions as part of the C$13 billion worth of projects it has on the table, all of which Chief Executive Officer Pat Daniel is confident will go forward.
They include the 400,000 bpd Alberta Clipper line to the Midwest, a 400,000 bpd expansion of the Southern Access system, a 400,000 bpd bullet line from Alberta to Texas and the 400,000 bpd Gateway project that could send 25 percent of its volumes to California.
Kinder Morgan has a competing proposal to access both Asia and California, while TransCanada has entered the regulatory process with its 400,000 bpd Keystone pipeline to the Midwest.
All of those endeavors were acknowledged by U.S. Energy Secretary Samuel Bodman during an Alberta visit in July when he was lobbied by Canadian industry sources to work with the states on greater cross-border cooperation to ease regulatory bottlenecks in the approval of new pipelines.
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