|Source: Daily Oil Bulletin
August 13, 2013
U.S. Still Far From Oil Independence By 2022, CERI Study Suggests
By Pat Roche
The recent surge in U.S. oil production has led to speculation that oil self-sufficiency is just around the corner, but a new report suggest that won't be even close to happening a decade from now.
In a report titled United States Oil Industry and Liquid Supply/Demand To 2022, the Canadian Energy Research Institute, citing U.S. government and private data, suggests U.S. independence from foreign oil imports is "not achievable" by then.
After accounting for imports from Mexico and Canada, the U.S. would still require two million bbls a day of crude imports to meet demand, the study suggests.
"This analysis assumes that pipeline and rail assets will be added when needed to allow crude to flow from sources to markets unimpeded," the report says. CERI's analysis assumes TransCanada Corporation's Keystone XL pipeline will be built and will operate at its full capacity, as will proposed enhancements to the Enbridge Inc. mainline. It also assumes rail capacity will be added as needed.
U.S. oil production is almost seven million bbls a day, while U.S. oil imports have dropped to 8.3 million bbls a day from a high of 10 million bbls a day in 2005. U.S. consumption of oil and oil equivalent liquids is more than 18 million bbls a day.
Improved fuel standards and conversion to natural gas fuels in the transportation sector could cut consumption by one million to two million bbls a per day, but the rate of adoption within the transportation sector is slow and "in all likelihood" will not be achievable until well into the next decade, CERI says.
The report says four plays -- the Bakken in North Dakota, the Eagle Ford in Texas, the Niobrara in Colorado and the Utica in Ohio -- "might have the potential" to bring on two million to four million bbls a day of new production by the end of the decade.
However, it notes U.S. "conventional" production and Gulf of Mexico offshore production are in decline, resulting in a potential loss of 1.5 million bbls a day, also by the end of the decade.
Canada currently exports more than 2.3 million bbls a day of conventional oil, bitumen and synthetic crude oil to the US.
Oilsands production growth plus non-oilsands oil potential from Western Canada could result in one million to two million bbls a day of new production looking for a market, possibly the U.S.
Last year the U.S. imported 4.49 million bbls a day from non-OPEC countries with 54 per cent of that oil sourced from Canada, 22 per cent from Mexico and nine per cent from Colombia. That was slightly more than the 4.03 million bbls a day imported from OPEC -- 34 per cent of which came from Saudi Arabia, 23 per cent from Venezuela and 12 per cent from Iraq.
Imports from countries other than Canada would decline to 3.1 million bbls a day by 2022 from 6.1 bbls a day in 2012, the CERI report suggests. It cites U.S. and industry forecasts that U.S. oil imports from Canada will grow to 4.05 million bbls a day by 2022 from 2.34 million bbls a day. Mexico is assumed to export about one million bbls a day to the U.S.
Last year the U.S. consumed 18.65 million bbls of oil and crude oil equivalent liquids per day to produce gasoline (47 per cent), diesel fuel (18 per cent), jet fuel (seven per cent), liquefied petroleum gases (12 per cent) and other residual products (16 per cent).
The supply to meet this demand came from domestic crude oil sources (34 per cent), crude oil imports (46 per cent), other liquid fluids from gas plants (13 per cent), and other product imports and blending components (seven per cent).
The report notes Venezuela, Saudi Arabia, Kuwait, Colombia and Canada have increased their exports to the U.S. since the recession of 2009, while Nigeria, Mexico and the British North Sea have reduced their exports.
In all, U.S. imports fell by 500,000 bbls a day during 2009-12.
CERI estimates Canada's production of light and conventional heavy oil will increase by 225,000 bbls a day by 2020.
Western Canadian conventional crude production had been falling since the 1970s, but advances in horizontal drilling and hydraulic fracturing reversed the trend in 2010, and production has been growing ever since.
Last year Alberta's oilsands output (upgraded and non-upgraded combined) reached the 1.8-million-bbl-a-day mark.
CERI developed a forecast of oilsands and non-oilsands volumes Canada could ship to the U.S. if pipeline and rail connectivity are fully developed. In this forecast, which is net of local demand, CERI has accounted for the expansion of the Enbridge Clipper pipeline Phases 1 and 2, construction of the Keystone XL pipeline and development of rail transport to 600,000 bbls a day.
These developments would deliver 1.4 million new bbls a day of bitumen and regular crude to the U.S. by 2018, the report says.
The report notes that in its Annual Energy Outlook 2013, the U.S. Energy Information Administration indicates U.S. consumption of hydrocarbon-based liquids will not grow significantly from its current level. That forecast shows U.S. consumption reaching 19.8 million bbls a day by 2022.
"The trend analysis of unconventional shale oil growth ... indicates that U.S. domestic supply could reach 8.9 million bbls a day by 2022," the study says.
The 85-page CERI Study No. 137 can be downloaded at http://www.ceri.ca/images/stories/ceri_study_137_-_united_states_oil_industry_and_liquid_supply-demand_to_2022_-_june_2013_final.pdf.