North America's production is surpassing the nation's current existing infrastructure, creating a bottleneck effect, discussed Edward Morse, managing director and global head of commodity research at Citi Group, at Platts 2nd Annual North American Crude Marketing Conference.
A panel of industry leaders discussed the U.S. crude movement, shale oil supply growth prospects for North America and beyond, and if the U.S. can absorb the soaring shale oil volumes.
"This year we will see extraordinary change that has been driven by what's going on in the United States and Canada," stated Morse.
So much production is coming online that the question of exporting crude is coming up and creating a "game changing" event that will have long-term impacts on global supply and demand. Over the next 12 years, industry leaders anticipate exporting crude to lead North America to the Promised Land – energy independence.
It is expected that North American crude oil production is expected to increase at an average rate of 6 percent per annum from 2012 to 2020. Non-U.S., non-Canadian waterborne imports will decrease from about 50 percent of crude oil supply in 2010 to 14 percent in 2017 and to 5 five percent in 2022, according to Bentek Energy. Furthermore, from 2012 to 2020 about half of all incremental global crude oil production, about 4.5 million barrels per day, will emanate from North America.
"Booming energy output from North Dakota to Texas is now driving U.S. economic growth, with U.S. onshore crude oil output growth exceeding previous growth rates in liquids, natural gas," said Francisco Blanch, head of global commodities and derivatives research at Bank of American Merrill Lynch.
"Non-OPEC supply growth is finally improving. If the U.S. had not been able to get this oil out of the ground last year, the U.S. would have been in a recession. It's setting north America apart from the rest of the world," Blanch said.
Rising oil output by the United States is "nothing short of spectacular" and will exceed Saudi Arabia or Russia by 2017, according to an International Energy Agency report.
With so much production coming online, industry officials expect that the nation will gain energy independence by 2025. If this projection comes true, "it will have dramatic ripple effects on U.S. manufacturing, foreign policy, defense spending, the account balance and the nation's budget deficit," said Gary Morsches, managing director of energy products at CME Group.
Furthermore, onshore production growth in North America will "provide a meaningful opportunity for the U.S. to dramatically wean itself away from non-Canadian waterborne imports," said Blanch.
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