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Lower 48 gains overshadow Alaska decline EIA says US oil production growth, driven by shale drilling, more than made up for Alaska, Gulf declines in 2011 — ditto for 2012 Kristen Nelson Petroleum News
The U.S. Energy Information Administration said U.S. crude oil production grew by an estimated 90,000 barrels per day last year to 5.57 million bpd, with a 370,000-bpd increase in Lower 48 production partly offset by a 40,000-bpd decline in Alaska and a 240,000-bpd decline in the federal Gulf of Mexico.
In its Jan. 10 Short-Term Energy Outlook, EIA forecast total crude oil production to increase by 170,000 bpd in 2012 and a further 80,000 bpd in 2013, with continued increases in Lower 48 onshore production overshadowing further declines in Alaska and in federal GOM production. Alaska output is forecast to decline by 30,000 bpd this year and Gulf production by 80,000 bpd.
“This rising trend in production continues to be driven by increased oil-directed drilling activity, particularly in onshore shale formations,” the agency said. EIA noted that Baker Hughes reported the number of onshore oil-directed drilling rigs increased from 777 at the beginning of 2011 to 1,193 on Dec. 29.
“For the first time since 1949, the United States was a net exporter of refined petroleum products in 2011,” with gross exports averaging 380,000 bpd more than gross product imports. By comparison, in 2005, product exports averaged almost 2.5 million barrels per day less than gross product imports, the agency said.
WTI averaged $95 in 2011 EIA said that in early 2011 it projected that West Texas Intermediate crude oil would average $93 in 2011; the final WTI average for 2011 was $95.
The agency expects WTI to average about $100 per barrel this year, up $5 per barrel from 2011.
That forecast assumes U.S. real gross domestic product grows by 1.8 percent in 2012 and by 2.5 percent in 2013, with the world real GDP (weighted by oil consumption) growing 2.9 percent in 2012 and 3.8 percent in 2013.
EIA said its current forecast for WTI spot oil prices averages $101 per barrel in the fourth quarter of this year, rising to $106 per barrel in the fourth quarter of 2013.
Record high gas storage Natural gas working inventories continue to set new record highs and ended 2011 at an estimated 3.5 trillion cubic feet, about 12 percent above the same time in 2010, EIA said.
The agency’s average 2012 Henry Hub natural gas spot price forecast is $3.53 per million British thermal units, a decline of almost 50 cents from the 2011 average spot price of $4 per million Btu, a decline EIA attributed to continued growth in production and a warm start to the winter heating season, both contributing to record-high natural gas inventories.
Henry Hub is expected to average $4.14 per million Btu in 2013.
Total domestic marketed natural gas production grew by an estimated 4.5 billion cubic feet per day (7.4 percent) in 2011, EIA said, “the largest year-over-year volumetric increase in history.”
The agency said the “strong growth was driven in large part by increases in shale gas production,” and said it expects natural gas production to grow by 1.4 bcf per day (2.2 percent) this year and by 0.7 bcf per day (1 percent) in 2013 “as low prices reduce new drilling plans and consumption grows at a measured pace.”
“In the face of continued low spot and future prices as well as record high storage levels for this time of year, drillers appear to have begun cutting back on new production plans for 2012,” EIA said.
And the natural gas rig count, reported by Baker Hughes as peaking for 2011 at 936 in mid-October, was down to 809 as of Dec. 29, EIA said.
“However,” the agency said, “high initial production rates from new wells, associated natural gas production from oil drilling, and a backlog of uncompleted or unconnected wells contribute to our forecast of further production increases in 2012, albeit at a significantly lower rate than 2011.”
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