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EIA projects US production at 6.4M bpd Agency says 2012 estimate an increase of 800,000 bpd from 2011, expected to increase to 7.1 million bpd in 2013, highest since ’92 Kristen Nelson Petroleum News
U.S. total crude oil production is expected to average 6.4 million barrels per day this year, the U.S. Energy Information Administration said in its latest Short-Term Energy Outlook, released Dec. 11.
The agency said the 6.4 million bpd is an increase of 800,000 bpd from 2011, with 7.1 million bpd forecast for 2013, a domestic production level which would be the highest annual average rate since 1992.
EIA said onshore Lower 48 crude production “is being driven by drilling activity in tight oil formations in Texas, North Dakota and Montana.”
The Bakken, in the Williston Basin in North Dakota and Montana, and Eagle Ford in the Western Gulf Basin in Texas, “are frequently referenced as the key productive plays in the United States and contribute about two-thirds of U.S. tight oil production,” the agency said.
The third key domestic growth area is the Permian Basin in East Texas, including plays such as Spraberry, Bonespring and Wolfcamp. The Permian “consists of layers of tight and conventional oil formations,” EIA said, with the majority of drilling in the region consisting of vertical wells producing from a number of overlapping formations. There are more than 400 active drilling rigs in the Permian, “by far the most of any U.S. basin,” and EIA said those rigs are “drilling a large number of wells very quickly.”
EIA said Permian Basin production is estimated to have surpassed 1.25 million bpd in November, 33 percent more than the estimated 930,000 bpd in the Western Gulf Basin and 45 percent more than the 860,000 bpd in the Williston Basin.
Alaska North Slope crude oil production reached a seasonal low of 400,000 bpd during summer maintenance in August, the agency said, and has recovered to 560,000 bpd. EIA said it expects Alaska crude to average 530,000 bpd this year, about 6 percent lower than in 2011, and 520,000 bpd in 3013.
Net imports falling In 2005, more than 60 percent of U.S. liquids fuel consumption was from imports, including crude oil, EIA said.
In 2011 that dropped to an average of 45 percent, down from 49 percent in 2010, and it expected to drop to 40 percent this year, EIA said, “as a result of continued substantial increases in oil production, an increase in net petroleum product exports, and an overall decline in liquid fuel consumption.”
With projected increases in domestic crude oil production, that number is expected to drop to 37 percent in 2013, and that would “be the first time since 1991 that the share of total U.S. consumption met by liquid fuel net imports is less than 40 percent,” the agency said.
EIA’s Annual Energy Outlook 2013 reference case, released in early December, has the import share continuing to decline to 34 percent in 2019, “with slow increases thereafter.”
EIA said it expects the Brent crude oil spot price to average $110 per barrel in the fourth quarter and the West Texas Intermediate crude oil spot price to average $89. Brent is forecast to average $104 per barrel next year, WTI $88.
The WTI discount to Brent averaged $23 per barrel in November and is expected to fall to $11 per barrel by the fourth quarter next year, the agency said.
Brent is projected to average $112 per barrel this year and WTI $89 per barrel in the fourth quarter, with the WTI discount to Brent expected to average $21 in the fourth quarter before falling to $11 by the end of 2013.
Henry Hub at $3.54 The Henry Hub spot price for natural gas averaged $3.54 per million British thermal units in November, up 23 cents from the October average and 30 cents above the November 2011 average.
EIA said it expects the Henry Hub spot price to average $2.78 per million Btu this year and $3.68 in 2013.
U.S. natural gas inventories hit a record level of 3.929 trillion cubic feet Nov. 2, “surpassing the previous record set the week before,” the agency said.
The record high at the end of the injection season “was due mainly to a high level of gas going into the injection season, rather than strong injection levels,” the agency said. The increase of 1.446 tcf in working gas inventory during the 2012 injection season (April through October), was small by historic standards, EIA said, noting that the 2011 inventory build was 2.224 tcf.
EIA’s forecast for U.S. marketed natural gas production in 2012 is 69.2 billion cubic feet per day, up 0.4 bcf from the November forecast, partly in recovery from hurricane Isaac in August, but also reversing several months of decline earlier in the year. The September volume, 69.4 bcf per day, “was slightly higher than January 2012 and the highest since February 1973 despite the decline in the natural gas rig count earlier this year,” the agency said.
Baker Hughes reported the natural gas rig count at 417 as of Dec. 7, down from 811 at the beginning of the year, EIA said.
Total marketed production is forecast to average 69.6 bcf per day next year.
“Even with the projected increases in the second half of 2012, production growth has slowed from its strong upward trajectory seen in 2009-11,” the agency said, adding that it “expects that growth in associated gas from crude oil production, as well as continued drilling in liquids-rich areas, will continue to offset the decline in drilling activity.”
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