US Oil Supply in April 2014

Source: OPEC 5/3/2014, Location: North America

The US oil supply increased by 1.14 mb/d to average 11.17 mb/d in 2013, indicating a downward revision of 10 tb/d from the previous MOMR, while growth remained steady.

The downward revision affected all quarters on the back of the historical revision. By quarter, US oil supply in 2013 registered an average of 10.62 mb/d, 10.92 mb/d, 11.38 mb/d and 11.74 mb/d, respectively. Updated production data for the early part of the first quarter supported the revision. US oil supply is projected to increase by 0.86 mb/d in 2014, the highest growth predicted among all non-OPEC countries, to average 12.03 mb/d, representing an upward revision of 10 tb/d from the previous MOMR. This revision was supported by a lower baseline in 2013. It is expected that US crude oil production growth, primarily concentrated in the Bakken, Eagle Ford and Permian regions, will continue in 2014 at a slower pace of growth than in the previous year.

On a quarterly basis, US oil supply in 2014 is forecast to average 11.70 mb/d, 11.81 mb/d, 12.10 mb/d and 12.45 mb/d, respectively. Actual production data from the Federal offshore Gulf of Mexico (GOM) and Alaska showed a decline in January from the previous month, while output in Texas and North Dakota continued their healthy growth. Expected growth in 2014 is supported by an anticipated supply increase from shale oil plays in North Dakota and Texas, as well as by minor growth from other areas with developed shale plays.

On a quarterly basis, US supply in 2014 is expected to average 11.78 mb/d, 11.80 mb/d, 12.09 mb/d and 12.45 mb/d, respectively. Based on the US Energy Information Administration (EIA)’s monthly oil production report for January, regular crude oil output registered at 4.93 mb/d, tight oil production increased to 3 mb/d, NGLs output reached 2.64 mb/d and biofuels and other nonconventional oils recorded the highest output at 1.22 mb/d. The use of energy from biomass resources in the United States grew by more than 60% over the decade between 2002 and 2013 — primarily through increased use of biofuels like ethanol and biodiesel which are produced from biomass. According to the EIA, biomass accounted for about half of all renewable energy consumed in 2013 and 5% of total US energy consumed. According to the above production levels of different US oil supply components in January 2014, the growth of each component in the last five-year period (January 2009 - January 2014) was 0.17 mb/d, 2.68 mb/d, 0.93 mb/d and 0.39 mb/d, respectively.

Upstream projects in 2014 include the development of Mars B in the deep waters of the Gulf of Mexico by Shell. To this end, production started in February on Olympus, the newly installed platform with a capacity of 100 tb/d. The development of two other projects— Na Kika (phase 3) and Cardamom Deep — was also scheduled for 1Q14, with a production capacity of 40 tb/d and 45 tb/d, respectively. The first BP Na Kika Phase 3 well began oil production on 19 February, with a second well expected to start up in the second quarter. The project includes the drilling and completion of the two new wells, the addition of subsea infrastructure to tie back to the Na Kika platform and new equipment to allow increased production from an existing well at the site. It will utilize available production capacity at the Na Kika hub. Na Kika Phase 3 is BP’s third new major upstream project set to begin production in 2014 following the Shell Mars B project in the Gulf of Mexico. The Cardamom project is expected to produce 50,000 barrels of oil equivalent (boe) a day at peak production. The operator company plans to add 45 tb/d from this field in 1Q14. Big Foot is another deep offshore project currently under development and is expected to commence production in 2Q14 with initial production of 75 tb/d.

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