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EIA forecasts dropping crude oil prices US crude oil production expected to continue to grow over next 2 years, from 6.4 million bpd last year to 7.8 million bpd in 2014 Kristen Nelson Petroleum News
The U.S. Energy Information Administration expects the Brent crude oil spot price to drop both this year and next. From an average of $112 per barrel last year, EIA said in its Feb. 11 Short-Term Energy Outlook, it expects Brent to average $109 per barrel this year and $101 per barrel in 2014. Brent rose to $119 per barrel in early February, the agency said.
The projected discount of West Texas Intermediate to Brent, which averaged $18 per barrel last year, is expected to drop to $9 per barrel in 2014, EIA said, as completion of planned new pipeline capacity lowers the cost of moving Midcontinent crude oil to the Gulf Coast.
EIA said the expected drop in the Brent crude oil spot price reflects an increasing supply of liquid fuels from non-Organization of the Petroleum Exporting Countries, OPEC.
WTC averaged $94 per barrel last year and is projected to average $93 per barrel this year and $92 per barrel in 2014, EIA said.
US production grows The estimated crude oil production in the U.S. last year was 6.4 million barrels per day, EIA said, an increase of 800,000 bpd from 2011.
Domestic crude oil production is projected to increase to 7.3 million bpd this year and to 7.8 million bpd in 2014, EIA said.
“Central to this projected growth will be continuing development of onshore basins,” EIA said, with drilling in tight oil plays in the Williston, Western Gulf and Permian basins expected to account for the bulk of the forecast production growth.
EIA noted a seasonal low in Alaska crude oil production of 400,000 bpd in August, during summer maintenance, with recovery to 530,000 bpd in October for an annual average of 530,000 bpd. Alaska crude oil production is projected to average 500,000 bpd this year and 470,000 bpd in 2014.
U.S. federal Gulf of Mexico production averaged an estimated 1.3 million bpd last year, down some 50,000 bpd from 2011, and EIA said it expects GOM production to increase to 1.4 million bpd this year, primarily due to new projects that started production last year. GOM production is projected to average 1.5 million bpd in 2014, “as several relatively high-volume deepwater projects are expected onstream.”
U.S. liquid fuel net imports, including crude oil, peaked in 2005 at 12.5 million bpd and fell to 7.5 million bpd last year. EIA said it expects imports to continue to decline to an average of 6.1 million bpd in 2014.
“Similarly, the share of total U.S. consumption met by liquid fuel net imports peaked at more than 60 percent in 2005 and fell to an average of 40 percent in 2012,” EIA said. It expects the net import share to fall to 32 percent in 2014 “because of continued substantial increases in domestic crude oil production.”
Natural gas EIA said it expects U.S. natural gas consumption to average 70.3 billion cubic feet per day in 2013 and 70 bcf per day in 2014, in what the agency called a “significant upward revision” from January’s projection of 69.7 bcf per day in 2013 and 69.4 bcf per day in 2014. The agency attributed the upward revision to “changes to historical industrial sector consumption data” in the recently released EIA Natural Gas Annual.
With closer-to-normal winter weather forecast for 2013 and 2014, compared to record warmth in 2012, EIA said there would be increases in natural gas use for residential and commercial heating.
Henry Hub natural gas spot prices, which averaged $3.33 per million British thermal units in January, were relatively unchanged from December, EIA said, despite colder weather in January. The Henry Hub spot price is projected to average $3.53 per million Btu this year, up from $2.75 per million Btu last year and to rise to $3.84 per million Btu in 2014.
EIA said the projected increase in natural gas prices contributes to a decline in natural gas used for electric power generation from 25 bcf per day in 2012 to 23.1 bcf per day projected in 2013 and 22.6 bcf per day in 2014.
“Consumption over the forecast period is less than the record high 2012 levels, but remains high by historical standards and reflects an ongoing structural shift toward using more natural gas for power generation,” EIA said.
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