11:25 am CST - October 16, 2013
Posted under The Scoop
Texas Insider Report: AUSTIN, Texas – The U.S. is expected to overtake Saudi Arabia as the world’s biggest total supplier of oil this year when natural gas liquids and biofuels are added to crude, said PIRA Energy Group earlier this week. “This is another sign of the successful story that is horizontal drilling,” said the president of Strategic Energy & Economic Research Inc., Michael Lynch. “This isn’t a big surprise, but notable all the same,” Lynch says.
And the U.S. position as the largest oil supplier in the world looks to be secure for many years, according to PIRA’s forecast. In 2012 the U.S. overtook Russia to become the 2nd largest supplier of oil, and was just behind Saudi Arabia. Both the U.S. and Saudi Arabia increased their supply in 2013, though production in the U.S. grew at a faster pace.
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The U.S. is forecast to pump 7.4 million barrels a day of crude and condensate, 2.5 million of natural gas liquids, and 1 million of biofuels according to PIRA. It also counted almost 1.3 million of “refinery gains,” a measure of the ability of refineries to optimize output through high-conversion capabilities.
The U.S. position has improved because of surging “shale oil” output, the New York-based energy consultant said. The combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies in shale formations in the central part of the country.
Shale liquids output has climbed 3.2 million barrels a day in the last four years, the biggest gain since Saudi Arabia raised production between 1970 and 1974.
Although growth rates of U.S. shale liquids are expected to become smaller in the future, the PIRA report forecasts the U.S. increasing the lead over the next two largest countries until after 2020, and retaining the lead to at least through 2030.
The U.S. is projected to produce an average of 12.1 million barrels a day of liquids in 2013, 300,000 barrels a day higher than Saudi Arabia and 1.6 million more than Russia, according to data reports announced by the PIRA Energy
Group, a a NYC-based energy markets consulting firm, at its recent client seminar held in New York City on October 10th and 11th.
Total oil supply counts all forms of liquids supply. The largest part is crude oil, including condensates. In this category, the U.S. is expected to produce 7.4 MMB/D, which is less than that produced in Saudi Arabia and Russia by roughly 3 MMB/D each. But the U.S. has substantial other forms of supply, including natural gas liquids (NGLs) at 2.5 MMB/D, biofuels at 1.0 MMB/D, and “refinery gain” at almost 1.3 MMB/D.
Refinery gain measures the ability of a refinery to optimize its output through sophisticated high conversion capabilities.
Saudi Arabia and Russia pump about 3 million barrels a day more crude oil than the U.S., PIRA said.
Total U.S. liquids supply is projected to climb 1 million barrels in 2013, about the same as last year’s growth, according to the PIRA forecast. This is greater than the sum of the next nine fastest-growing countries combined, and has covered most global demand gain over the past two years.
U.S. liquids output will probably rise faster than that in Saudi Arabia and Russia until after 2020 and the nation should maintain the lead through 2030, according to PIRA. U.S. total liquids supply for 2013 is expected to average 12.1 million barrels a day.
The U.S. has surged to be the world’s lead oil supplier because of growth in shale oil. Shale crude and condensate production in 2013 is now slightly over one-third of total U.S. crude production, and shale NGL is almost half of total NGLs.
The U.S. shale liquids growth of 3.2 MMB/D over the last four years has been nearly unparalleled in the history of world oil; only Saudi Arabia in 1970-74 raised its production faster.
Shale crude is seen growing by 0.8 MMB/D this year, while shale NGL grows 0.3 MMB/D versus 2012.