EIA projects growing US oil production

Domestic crude expected to average 6.3 million bpd this year, up from 2011; 6.9 million bpd for 2013 would be highest since 1993

Kristen Nelson

Petroleum News

The U.S. Energy Information Administration said Oct. 10 in its short-term outlook that U.S. total crude oil production is expected to average 6.3 million barrels per day this year, up 0.7 million bpd from 2011, with 2013 production projected to increase to 6.9 million bpd, the highest level of domestic production since 1993.

EIA said domestic crude oil production increased by an estimated 180,000 bpd, 3.2 percent, to 5.7 million bpd in 2011.

The expected increase to 6.3 million bpd this year includes Lower 48 production (excluding the federal Gulf of Mexico) growing by 780,000 bpd, “primarily from the Bakken, Permian basin, and Eagle Ford producing areas.”

Total crude oil output increases by a further 530,000 bpd in 2013.

Baker Hughes is reporting onshore oil-directed drilling rigs at 1,398 on Oct. 5, compared to 777 at the beginning of 2011 and 1,191 at the start of this year.

The share of U.S. consumption met by liquid fuel net imports of crude oil and products peaked at more than 60 percent in 2005 and has been falling since, averaging 45 percent last year, down from 49 percent in 2010.

EIA said it expects the “total net import share of consumption will continue to decline to 41 percent in 2012 and to 39 percent in 2013 because of the substantial increases in domestic crude oil production.”

The agency said that if the forecast holds true, “it would be the first time the share of total U.S. consumption met by liquid fuel net imports is less than 40 percent since 1991.”

Natural gas production up

Production has fluctuated with small ups and downs so far this year, the agency said, “in contrast to the strong upward growth seen between 2009 and 2011,” and said it expects some small declines in coming months “related to recent drops in the rig count.”

Baker Hughes shows a natural gas rig count of 437 as of Oct. 4, compared with 811 at the start of the year.

EIA said it is forecasting the growth in total marketed production to slow to 2.6 bcf per day this year and 0.4 bcf per day next year, “as the reduction in drilling activity is offset by growth in production from liquids-rich natural gas production areas such as the Eagle Ford and wet areas of the Marcellus Shale, and associated gas from the growth in domestic crude oil production.”

Domestic natural gas consumption is expected to average 69.8 bcf per day this year, up 3.1 bcf per day from last year, with large gains in electric power use more than offsetting declines in residential and commercial use.

Gross pipeline imports are expected to fall by 0.2 bcf per day, 2.3 percent, this year, “as domestic supply continues to displace Canadian sources.”

EIA said warm weather in the U.S. early in the year also added to year-over-year decline in imports, particularly in the Northeast where imported natural gas provides additional supply in very cold weather.

Little change in pipeline gross imports is expected in 2013.

Pipeline gross exports grew by 1 bcf per day in 2011, driven by increased exports to Mexico, but are expected to remain flat in 2012 and grow by only 0.1 bcf per day next year.

EIA expects liquefied natural gas imports to fall by about one half this year from 2011, with an average of about 0.5 bcf a day expected to arrive in the U.S., mainly at the Elba Island terminal in Georgia and the Everett terminal in New England, both this year and next, “either to fulfill long-term contract obligations or to take advantage of temporarily high local prices due to cold snaps and disruptions.” The agency noted that high prices for LNG, particularly in Asia, “have made the United States a market of last resort for LNG suppliers.”