US Production Makes Huge Gains; Mexico Allows Foreign Exploration
This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.
The news that Mexico will allow foreigners to search for oil and gas, and that U.S. oil production could set a new record as early as 2016 sent shock waves through the industry.
The Energy Information Administration (EIA) predicted on December 16 that oil production in the United States will grow 800,000 barrels per day (b/d) through 2016. If this occurs, domestic oil production will hit its historic high of 9.6 million b/d that was achieved almost 50 years ago in 1970.
With domestic crude oil production rising to 9.5 MMbbl/d in 2016, the net import share of U.S. petroleum and other liquids supply will fall to about 25%.
The Brent crude oil spot price declines from $112 per barrel (bbl) (in 2012 dollars) in 2012 to $92/bbl in 2017. After 2017, the Brent spot oil price increases, reaching $141/bbl in 2040 due to growing demand that requires the development of more costly resources. World liquids consumption grows from 89 MMbbl/d in 2012 to 117 MMbbl/d in 2040, driven by growing demand in China, India, Brazil, and other developing economies.
While domestic crude oil production is projected to level off and then slowly decline after 2020, natural gas production grows steadily, with a 56% increase between 2012 and 2040, when production reaches 37.6 trillion cubic feet (Tcf), according to EIA.
Projected low prices for natural gas make it a very attractive fuel for new generating capacity. In some areas, natural-gas-fired generation replaces power formerly supplied by coal and nuclear plants. In 2040, natural gas accounts for 35% of total electricity generation, while coal accounts for 32%. Electric power generation from renewables is bolstered by legislation enacted at the beginning of 2013 extending tax credits for generation from wind and other renewable technologies.
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.