Oil Forecast EIA Feb 2013

7/28/2019 Oil Forecast EIA Feb 2013

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U.S.EnergyInformationAdministration | STEOSupplement:U.S.CrudeOilProductionOutlook 1

February14,2013

ShortTermEnergyOutlookSupplement:KeydriversforEIAsshorttermU.S.crudeoilproductionoutlook

Crudeoilproductionincreasedby790,000barrelsperday(bbl/d)between2011and2012,thelargest

increaseinannualoutputsincethebeginningofU.S.commercialcrudeoilproductionin1859. TheU.S.

EnergyInformationAdministration(EIA)expectsU.S.crudeoilproductiontocontinuerisingoverthe

nexttwoyearsrepresentedintheShortTermEnergyOutlook(STEO).

U.S.crudeoiloutputisforecasttorise815,000bbl/dthisyearto7.25millionbarrelsperday,according

totheFebruary2013STEO. U.S.dailyoilproductionisexpectedtorisebyanother570,000bbl/din

2014

to

7.82

million

barrels

per

day,

the

highest

annual

average

level

since

1988.

Most

of

the

U.S.

productiongrowthoverthenexttwoyearswillcomefromdrillingintightrockformationslocatedin

NorthDakotaandTexas. ThispaperexplainstheunderpinningsofEIAsshorttermforecastforcrudeoil

production.

Increasingtightoilproductionisdrivenbytheuseofhorizontaldrillinginconjunctionwithmultistage

hydraulicfracturing,whichprovidesbothhighinitialproductionratesandhighrevenuesatcurrentoil

prices. Additionaltechnologicalandmanagementimprovementshaveincreasedtheprofitabilityof

tightoilproduction,therebyexpandingtheeconomicallyrecoverabletightoilresourcebaseand

acceleratingthedrivetoproducetightoil. Thesetechnologyandmanagementimprovementsinclude,

butarenotconfinedto:

Multiwelldrillingpads Extendedreachhorizontallateralsupto2milesinlength Optimizationofhydraulicfracturingthroughmicroseismicimagingandenhancedinterpretation

Simultaneoushydraulicfracturingofmultiplewellsonapad Drillingbitsdesignedforspecificshaleandtightformations Walkingdrillingrigs

Furtherimprovementsintechnology,suchasselectivefracturingalongthehorizontallateral(the

horizontalsection

of

awell)

to

avoid

zero

or

low

production

stages,

based

on

local

geologic

characteristics,mightfurtherimprovetheeconomicsoftightoilproduction. Evenso,diminishing

returnstoscaleandthedepletionofthehighproductivitysweetspotsareexpectedtoeventually

slowtherateofgrowthintightoilproduction. Itisdifficulttopredictwhenthatinflectionpointwillbe

reachedbecauseitcanbepushedfartherintothefuturebyincreasesinthenumberofdrillingrigsand

furthertechnologicalchange.


2/15


Overviewofthecrudeoilproductionforecast

ThegrowthinU.S.crudeoilproductionoverthepastseveralyearshascomelargelyfromonshore

basinsinwhichexplorationandproduction(E&P)companiesaremostactive(Figure1). Currently,the

mostimportantbasinsforproductiongrowthare:

TheWillistonBasininNorthDakotaandMontana,whichincludestheBakkenFormation TheWesternGulfBasininsouthTexas,whichincludestheEagleFordFormation ThePermianBasininWestTexasandsoutheastNewMexico,whichincludestheSpraberryand

Wolfcampformations1

Figure1.Keyonshorecrudeoilproductionbasins

Note:Counties

with

at

least

one

producing

well

from

2008

to

present

are

shaded.

Basins

are

represented

with

dashed

outlines.

Thesevenmodelregionsareindentifiedwithleadingnumbersinlegend.

Source:U.S.EnergyInformationAdministrationanalysisofdatafromDrillingInfo.

1TheDenverBasininColoradoandWyomingandtheAnadarkoandArkomabasinsinnorthTexas,Oklahoma,and

Arkansas,whilecurrentlyproducingmuchlessthantheotherthreeoilbasins,areprospectsforsignificant

productiongrowth.


3/15


Atpresent,drillingactivityisfocusedmostlyontight,orverylowpermeability,geologicformations,

includingshales,chalks,andmudstones. Theseformationsareparticularlyattractivebecausethe

drillingandfracturingoflonghorizontalwelllateralsyieldshighinitialproductionvolumesand,

therefore,strongcashflows.

EIAestimates

that

total

U.S.

oil

production

will

increase

from

6.89

million

bbl/d

in

November

2012

to

8.15millionbbl/dinDecember2014(Figure2). IntheLower48states,excludingtheGulfofMexico

FederalOffshoreregion(FederalGOM),productionisforecasttorisefrom4.97millionbbl/dto6.10

millionbbl/doverthesameperiod,representingmostoftheincreaseinU.S.oilproduction. Oil

productionfromoffshorefieldsisexpectedtoresumeanupwardtrajectoryasoperatorsintensify

explorationanddevelopmenteffortsinthedeepwaterportionsoftheFederalGOM.FederalGOM

productionincreasesfrom1.37millionbbl/dinNovember2012to1.55millionbbl/dinDecember2014.

Atthesametime,EIAexpectsthatthecontributionfromAlaskaandothermatureonshoreareasinthe

Lower48stateswillcontinuetowaneoverthenexttwoyears.

Figure2.Regionaloilproductionforecasts

Source: U.S.EnergyInformationAdministration(EIA)analysisofdatafromDrillingInfo,throughNovember2012.EIAforecast

through2014.


4/15


ItisexpectedthatE&Pcompanieswillcontinuetofocusprimarilyonexistingandemergingtightoil

formationswherethecombinationofhorizontaldrillingandhydraulicfracturinggenerateshighinitial

productionrates. Whileoilproductionfromothersourceswillcontinuetoaccountformostofthe

countrysoutput,productionvolumesfromtightformationssuchastheBakken,EagleFord,and

Spraberryareforecasttosteadilyincreasetightoilsproductionshare,reachingaboutonethirdoftotal

U.S.oil

production

by

2014

(Figure

3).

Figure3.SelectedtightoilproductionhistoryandU.S.oilproductionforecast

Source: TightoilproductionestimatedbyU.S.EnergyInformationAdministration(EIA)analysisofdatafromDrillingInfo,

throughAugust2012,U.S.totaloilproductionthroughNovember2012fromEIA,EIAforecastthrough2014.

Productiongrowthfollowsdrillingactivity

Tightoilproductiongrowthisdrivenbythenumberofrigsdrillingwells,howquicklythoserigscandrill

awell,howproductiveeachwellisinitially,andhowquicklyproductionfromeachwelldeclines.

Forecasting

this

growth

in

production

depends

both

on

historical

data

and

assumptions

about

potential

changestoeachofthesefactors.

Drillingactivityisaleadingindicatoroffutureproductiongrowthbecauseitisthemostcurrentdata

available. Drillingactivityismeasuredbythenumberofrigsactivelydrillingforoiland/ornaturalgas

withinaspecificregion.


5/15


Drillingefficiency,thenumberofdaysrequiredtodrillawellorthenumberofwellsdrilledinayear,

quantifiesthespeedofdrillingwells.Drillingwellsfastereffectivelyincreasesthenumberofrigs.Drilling

efficiencyisestimatedfromthenumberofwellsthatstartproductionoveracertaintimeperiod

comparedwiththenumberofrigsinoperation,afteraccountingforanassumedlagtocompletethe

wells.

EIAusespubliclyavailableweeklyandmonthlyrigcountsfromBakerHughesandSmithBits. This

information,inconjunctionwithdataregardingtheaveragenumberofdaysarigtakestodrillasingle

well,providesanestimateofthenumberofwellsthatwillbedrilledandcompletedoveraspecifictime

periodforaparticularregion.

Horizontaldrillingandmultiplewellpaddrillingboostproductionintightformations

Insomebasins,suchasthePermianandDenver,producersoftendrillthrough,hydraulicallyfracture,

andproducefrommultiplestackedtightformations,spanninghundredstothousandsofverticalfeet. In

contrast,producersintheWesternGulfandWillistonBasinsdrillverticallyintoasingletightoil

formationtargeted

for

production,

then

drill

horizontally

through

the

formation.

Horizontal

wells

exposethousandsoffeetofoilbearingformationsurfacetoachievethesameeffectasfracturing

thousandsoffeetofverticaldepththroughmultipleformationsusingaverticalwell. However,

horizontalwellsaremoreexpensive.

Inthosetightoilformationswherehorizontaldrillingisextensive,producershavegraduallylengthened

thehorizontallateral. IntheBakken,forexample,horizontallateralsarenowtypically10,000feetin

lengthwith30fracturingstages. Longlateralwellsnotonlyhelpreducewellcostsperbarrelproduced

andincreaseproduction,theyalsoreduceproducerriskbyensuringthatalargecrosssectionofrockis

exposedtoproduction.Thisway,thehighlyproductivestagesinalateraloffsetitslowproductivity

stages.However,

because

horizontal

laterals

are

more

expensive

to

drill

per

foot

than

vertical

well

footage,therearediminishingreturnstoeverlongerlaterals.

Multiplewellpaddrilling,inwhichmultiplewellsaredrilledfromasinglesurfacelocation,isassistedby

theavailabilityofhorizontaldrillingtechnology.Multiplewellpaddrillingdecreasesthesite

preparationandremediationcostsassociatedwithsinglewelldrillingpads,whilealsoreducingthe

environmentalimpactswithasmallerdrillingfootprint.Multiplewellpadsalsoallowproducersto

operateatgreatereconomiesofscalebecausetheycanhandlelargerproductionvolumesatasingle

site,therebyreducingoperatingandmaintenancecosts. Anotherrecenttime andcostsaving

innovationbeingemployedbytightoilproducersisthewalkingdrillingrig,whichcanmovebetween

wells

on

the

drilling

pad

without

having

to

be

disassembled

and

reassembled.

Leasestrategiescanalsocontributetodrillingefficiency

Forsometightformations,suchastheBakkenandEagleFord,wherethemostdesirableacreagehas

alreadybeenleased,producersarenowachievingfurthereconomiesofscalebybuying,selling,and

tradingleasestoincreasethesizeoftheircontiguousleaseacreage. Thisallowstheirdrillingand

productioncrewstooperatewithinfewerandlargerleaseholdsratherthanacrossadispersedsetof


6/15


smallersizedleases. TheNorthDakotaIndustrialCommissionsunitizationofleasesina1mileby2

milegridpatternshouldcreatelongterminfrastructureefficiencieswherebyserviceroadsareoriented

alongtheaxes.

Futureefficiencygainsmaybemoregradual

Thewelldrillingandcompletionefficiencygainsthathavebeenachievedoverthelastfewyearsnot

onlyimprovethewellprofitabilityofthetightformationsweetspotsbutalsoturnportionsofthe

formationthatwerenotpreviouslyprofitabletoproduceintoprofitableacreage.Sotheneteffectofall

theseefficiencygainsistoincreasethesizeoftheeconomicallyrecoverabletightoilresourcebase.

Althoughoilproducershavegreatlyimprovedtheeconomicefficiencyofdrillingandcompletingtightoil

wells,therateofchangeinefficiencyimprovementsisexpectedtoslowdowninthefutureandbecome

morerepresentativeoftheoverallrateoftechnologicalimprovementexperiencedbytheoilandgas

industryasawhole. Forexample,Bakkenwelllateralsaretypically10,000feetlongwith30hydraulic

fracturingstages;aSchlumbergerresearchreportindicatesthatthisistheoptimalnumberoffracturing

stagesfor

aBakken

well

of

that

lateral

length.2

The

easy

improvements

in

tight

oil

well

drilling

and

completionefficiency(e.g.,longerlaterals,paddrilling)haveapparentlybeenachieved;therefore,

futureimprovementstoexistingtechnologyarelikelytooccuratamoremeasuredpace.

Moreover,asthehighproductivityportionsofthetightoilformations(i.e.,sweetspots)aredepleted,

drillingactivitywillhavetofocusonthelessproductiveportionsofthetightformations,requiringmore

wellcompletionsjusttomaintainoilproduction.Aslowerfuturerateoftechnologicalimprovements,

combinedwithdrillingactivitythatmovesintolessproductiveareas,willrequirethededicationofmore

drillingrigseithertoincreaseormaintaintightoilproduction.

Onshore

forecast

assumptions

EIAsshorttermcrudeoilproductionmodelforecastsliquidsproductioninthemajoronshorebasins. In

eachbasin,thenumberofnewoilwellsdrilledeachmonthisestimatedfromaforecastofoildirected

rigcountandrigefficiency. Rigefficiency,orthenumberofwellsdrilledperrigeachyear,isderived

fromtherecentnumberofnewoilwellsstartingproductioninabasincomparedtothenumberof

drillingrigsoperatinginthatbasin.Forecastrigefficiencyalsotakesintoconsiderationthedegreeof

technologicalandmanagementimprovementsthatareexpectedtooccurovertime.

Newwellproductionprofilesarealsoestimatedforeachbasin(Figure4). Initialwellproduction(IP)

ratesandmonthlydeclineratesofthenewwellsareestimatedusingrecenthistoricaldataforthewells

producingin

each

of

the

three

key

basins.

The

IP

rate

is

an

estimate

of

the

average

daily

flow

rate

over

thefirst30daysthewellisflowing. Becausesomewellscomeonlineatthebeginningofthefirstmonth

whileotherscomeonlineinthemiddleorattheendofthatmonth,thefirstmonthofproductionfor

theaveragewellisgenerallyhalftheestimatedIP. Subsequentmonthsarefullproductionmonths,so

thesecondmonthofproductionisgreaterthanthefirstmonthofproduction.

2SocietyofPetroleumEngineers,HastheEconomicStageCountBeenReachedintheBakkenShale?,byJason

Baihly,et.al.,SPEDocumentNumber159683,presentedinAlberta,Canada,September2425,2012.


7/15


Figure4.Productionprofileofaveragewellsinthreekeybasins,2011topresent

Source: U.S.EnergyInformationAdministration(EIA)analysisofDrillingInfodata

IntheWesternGulfBasin,therigcountdeclinedduringthesecondhalfof2012,butisforecastto

increasemoderatelyduring2013and2014(Table1). Whilearigtypicallytakeslongerthanamonthto

drillanewwell,theincreaseduseofpaddrilling,asdescribedbelow,isexpectedtoincreaserig

efficiencytoaboutonewellperrigpermonthin2013and2014. Basedontherigcountrisingtoabout

360in2014,about8,400totalnewwellswouldbedrilledin2013and2014intheWesternGulfBasin.

Table1. Forecast assumptions for liquids production in three key basins

2012 2013 2014

WesternGulfBasin

AverageDrillingRigCount 352 338 361

RigEfficiency(wells/rigyear) 9 12 12

NewWellCount 3,042 4,061 4,337

WellInitialProduction(bbl/d) 331 290 269

Production(millionbbl/d) 0.89 1.28 1.58

PermianBasin





Production

(million

bbl/d)

1.18

1.29

1.37

WillistonBasin





Production(millionbbl/d) 0.72 0.95 1.13

Source:U.S.EnergyInformationAdministration


8/15


In2012,themajorityofnewwellsdrilledintheWesternGulfBasinwerehorizontalwells. In2013and

2014,theproportionofhorizontalwellsisexpectedtoincreaseastheEagleFordformationisfurther

developed. Asaresult,theproductionprofileofanaveragewellinthisbasinwillcloselyresemblethe

profileof

an

Eagle

Ford

horizontal

well,

with

high

initial

production

rates

followed

by

asteep

decline.

TheIPrateofaWesternGulfBasinwellisforecasttobe290bbl/din2013. TheIPratedeclinesto269

bbl/din2014,assomeoftheEagleFordsweetspotsarecompletelydrilledandproducersmoveinto

areaswithlowerwellproductivity. Overall,thesechangesresultinWesternGulfBasinoilproduction

increasingfrom890,000bbl/din2012to1.28millionbbl/din2013and1.58millionbbl/din2014. By

December2014,oilproductionisforecasttoreach1.71millionbbl/d,makingthisbasinthelargest

domesticoilproducerattheendof2014.

TheWillistonBasin,whichcontainstheBakkenformation,isforecasttoslowproductiongrowthfrom

2013to2014. SimilartotheWesternGulfBasin,EIAforecastsrigefficiencytorisetoaboutonewellper

rigpermonththrough2014. Asthehorizontalwellsinthisregionaregenerallylongerthaninother

regions,andonedrillingpadcandevelopoilfromalargerarea,rigcountsareforecasttodeclinefrom

anaverageof208rigsin2012toabout196in2013and184in2014,withover4,500newwellsbeing

drilledthrough2014.

IntheWillistonBasin,almostallnewwellsarehorizontal,andthistrendwillcontinuein2013and2014.

WillistonBasinwellshaveveryhighIPrates,averaging435bbl/din2013anddecliningto414bbl/din

2014asthebasinssweetspotsarefullydrilled.AlthoughWillistonIPratesareveryhigh,withfewer

wellsforecasttobedrilled,WillistonBasinoilproductionisnotforecasttogrowasmuchasinthe

WesternGulfBasin.WillistonBasinoilproductionincreasesfrom720,000bbl/din2012to950,000

bbl/din2013and1.13millionbbl/din2014,withDecember2014productionaveragingjustunder1.19

millionbbl/d.

Winterweatheriscontributingtoadelayincompletingwellsaftertheyaredrilledandthusiscurrently

slowingthegrowthinWillistonBasinoilproduction.Thespringthawandweightrestrictionsonroads

mayalsoslowproductiongrowth.However,oncetheweatherimproves,productionisforecasttosurge

asthebacklogofwellswaitingforcompletionisworkedoff.

PermianBasinwellshavedifferentproductionandspacingcharacteristicsthanwellsintheWesternGulf

andWillistonbasinsbecauseofthelargeproportionofverticalwellsdrilledinthatbasin.In2012,there

wereanaverageof506rigsinthebasin,drillingslightlylessthanonewellperrigpermonth. Permian

Basin

production

growth

is

driven

by

the

large

number

of

new

wells

drilled

during

2013

and

2014,

with

about10,150newwellsdrilledthrough2014.

VerticalwellsinthePermianBasinhavelowerIPrates(Figure4). Forecastnewwellsin2013and2014

haveanaverageIPrateof93bbl/d. Althougheachwellproduceslessoilinitially,thelargemagnitude

ofnewwellsincreasesproductionfromanaverageof1.18millionbbl/din2012to1.29millionbbl/din

2013and1.37millionbbl/din2014. InDecember2014,productionisforecasttobe1.41millionbbl/d.


9/15


CrudeOilPipelineInfrastructure

TherapidgrowthofproductionfromtightoilplaysintheU.S.midcontinent,aswellasthe

developmentofoilsandsinCanada,havedramaticallychangedthebalanceofflowsatCushing,

Oklahoma,whichwashistoricallythedistributionhubofimportedandWestTexasproducedcrudeoil

forGulfCoastrefineries. Overthelastthreeyears,pipelinecapacityfordeliveringcrudeoiltoCushing

increasedbyabout815,000bbl/d(solidlinesonFigure5). Thekeydevelopmentwastheconstruction

ofthe590,000bbl/dTransCanadaKeystonepipelinethatoriginatesinHardisty,Alberta,Canada. Phase

1oftheKeystonepipeline,whichrunsfromHardistytoSteeleCity,Nebraska,andontoPatoka,Illinois,

wascompletedinJune2010. Phase2oftheKeystonepipeline,whichextendedthepipelinefromSteele

CitytoCushing,wascompletedinFebruary2011.

Table2. NewPipelineProjectsDeliveringCrudeOiltoCushing,Oklahoma(20102012)

PipelineProjectNew

Capacity

(bbl/d)In

Service

Date Description

Hawthorn 90,000 Jan2010

New17.5mile,12inchpipeline

servingrailfacilityinStroud,

Oklahoma

TransCanadaKeystone 590,000 Feb2011

NewpipelinefromNebraska

deliveringcrudeoilfromHardisty,

CanadaandWillistonBasin

WhiteCliffsPipelineexpansion 40,000 3Q2011PipelinefromColoradoexpanded

from30,000bb/dto70,000bbl/d

PlainsAllAmericanMedfordto

Cushingconversion

25,000

Jul

2012

PipelinefromMississippianLime

formationconverted

from

LPG

service

PlainsAllAmericanBasinpipeline

expansion50,000 1Q2012

PipelinefromPermianBasin

expandedfrom400,000bbl/dto

450,000bbl/d

ParnonGreatSaltPlainspipeline 20,000 Oct2012

New115mile,8inchpipelinefrom

CherokeeintheMississippianLime

formation


Untilmid2012,therewasonlyonepipelinethatcoulddelivercrudeoilfromtheMidwesttotheGulf

Coast.The

96,000

bbl/d

ExxonMobil

Pegasus

pipeline

between

Patoka,

Illinois

and

Nederland,

Texas

originallyshippedcrudeoilnorthward. Thepipelinewasreversedin2006inordertoshipCanadian

heavyoiltotheGulfCoast. ThegrowingsupplyofcrudeoilintoCushingquicklyexceededthecapacity

ofMidwestrefineriestoprocessit.Asaresult,the150,000bbl/dSeawaypipelinecarryingimported

crudeoilfromtheGulfCoasttoCushingwasreversedinMay2012. Becauseittakesfouryearsor

longertoplan,obtainpermits,andbuildnewinterstatepipelines,majorexpansionofnewpipeline

capacitytodeliverthefastgrowingmidcontinentcrudeoilproductiontotheGulfCoastisjustnow


10/15


nearingcompletion. TheEnbridge/EnterpriseSeawayExpansionbrought250,000bb/dofnewcapacity

intoserviceonJanuary11,2013.Anewpipelinewith700,000bbl/dofcapacityisexpectedtobe

completedinthefourthquarterof2013andanadditional450,000bbl/dofcapacityisexpectedtobe

addedin2014(Table3).

Table3.

New

Pipeline

Projects

from

Cushing,

Oklahoma

to

the

Gulf

Coast

(2013

2014)

PipelineProject

NewCapacity

(bbl/d)

PlannedIn

ServiceDate Description

Enbridge/EnterpriseSeawayexpansion 250,000Jan11,2013

completed

Expandexistingpipelinefrom

150,000bbl/dto400,000bbl/d

TransCanadaGulfCoastproject 700,000 4Q2013New485mile,36inchpipelineto

Nederland,Texas

Enbridge/EnterpriseSeawaytwin 450,000 1Q2014New512mile,30inchpipeline

paralleltoexistingSeawaypipeline


InanticipationofthenewpipelinetakeawaycapacityfromCushing,1,225,000to1,315,000bbl/dof

newpipelinecapacitytodelivercrudeoilintotheCushinghubisalsoplanned(Table4).

Table4. NewPipelineProjectsDeliveringCrudeOiltoCushing,Oklahoma(20132014)

PipelineProject

NewCapacity

(bbl/d)

PlannedIn

ServiceDate Description

PlainsAllAmericanMississippianLime 175,000 Mid2013

New170milepipelinefrom

MississippianLimeformationinthe

Anadarkobasin

SemGroup/GavilonGlassMountain 140,000 Fall2013

New210mile,20inchpipelinefrom

MississippianLimeandGranite

WashformationsintheAnadarko

basin

WhiteCliffspipelineexpansion 80,000 1H2014Expansionfrom70,000bbl/dto

150,000bbl/d

EnbridgeFlanaganSouth 600,000 Mid2014New600mile,36inchpipeline

parallelingexistingSpearheadline

TallgrassPonyExpressconversion230,000

320,000..3Q2014

Convert430milesofexistingnatural

gaspipelinefromBakkenand

DenverJulesburgbasinsand

construct260mileextensionto

PoncaCity,OklahomaandCushing,

Oklahoma



11/15


CrudeoilproductioninthePermianBasinfacesthesametransportationconstraintsasCanadian

importsandproducersinthemidcontinent. Twopipelinescurrentlytransportcrudeoilfromthe

PermianBasintoCushing: thePlainsAllAmericanBasinpipeline,whichwasexpandedfrom400,000to

450,000bbl/dinearly2012;andthe175,000bbl/dOxyCenturionpipeline. Athirdpipeline,theSunoco

LogisticsWestTexasGulfpipeline,hasthecapacitytotransport300,000bbl/dfromthePermianBasin

toLongview,

Texas,

where

it

connects

with

the

Mid

Valley

pipeline

to

Samaria,

Michigan.

Because

the

existingpipelinesarenearlyfullyutilizedanddelivercrudeintotheoversuppliedMidwestmarket,six

pipelineprojectsthatincludepipelinereversals,expansion,andnewlineswouldprovide355,000bbl/d

ofnewcapacitytomovecrudeoilfromthePermianBasintotheGulfCoastin2013,and478,000bbl/d

ofnewcapacityin2014(Table5).

Table5. PlannedNewPipelinesfromthePermianBasintotheGulfCoast

PipelineProject

NewCapacity

(bbl/d)

Planned

Completion Description

SunocoLogistics

West

Texas

Gulf

40,000

1Q

2013

Connection,expansion,extension,

andreversal

of

West

Texas

Gulf

pipeline

MagellanLonghornreversal 135,000 Early2013

ConversionandreversalofLonghorn

refinedproductspipelinefromCrane

toHouston,Texas

MagellanLonghornexpansion 90,000 Mid2013ExpandcapacityoftheCraneto

Houstonpipeline

SunocoLogisticsPermianExpress 90,000 1Q2013

Reversalofexistingpipelineandnew

pipelinealongsideexistingWest

TexasGulfpipeline. Capacityis

expandableto150,000bbl/d

SunocoLogisticsPermianExpress

phase2200,000 2H2014

ExpansionofWestTexasGulf

pipelinefromColoradoCity,Texasto

Nederland,Texas

Magellan/OxyBridgeTex 278,000 Mid2014New400milepipelinefromColorado

City,TexastoTexasCity,Texas


Overthepastthreeyears,almost815,000bbl/dofnewpipelinecapacitydeliveringcrudeoiltoCushing

wasadded.Overthesameperiod,only400,000bbl/dofnewpipelinetakeawaycapacitywasadded.

Duringthe

next

two

years

an

additional

1,190,000

bbl/d

of

pipeline

capacity

for

delivering

crude

oil

from

CanadaandthemidcontinenttoCushingisplanned,butthisisbalancedby1,150,000bbl/dofplanned

pipelinecapacityadditionstodelivercrudeoilfromCushingtotheGulfCoast. Inaddition,about

830,000bbl/dofnewpipelinecapacityisplannedtomovecrudeoilfromthePermianBasintotheGulf

Coast(Figure5).


12/15


Figure5. MapofrecentlycompletedandplannedpipelinesinandoutofCushing,Oklahomaand

EagleFordshaleplay



13/15


OffshoreFederalGulfofMexico(FederalGOM)

During2012,oilproductionintheFederalGOMisprojectedtohaveincreasedfromabout1.31million

bbl/dinJanuarytoabout1.39millionbbl/dinDecember(up6percent). ThisFederalGOMoil

productionincreasewasdrivenbytheinitiationofproductionat13newdeepwaterfieldswitha

combinedpeak

production

of

about

195,000

bbl/d,

as

well

as

the

restarting

of

the

Mad

Dog

Field,

which

hadbeenofflinesinceApril2011(Table6).

Table6.FederalGOMProducingProjects

ProjectName Start Peakdate Peakmbbl/d

Morgus Feb12 Mar12 7

SouthRaton Feb12 May12 4

Pyrenees Feb12 Mar12 2

WestTonga Mar12 May12 29

Caesar Mar12 Jul12 20

Cascade Feb12 Jun12 6

TahitiPhase2* Apr12 Nov12 30

WideBerth Apr12 May12 3

Isabela* Jun12 Jul13 18

Santiago* Jun12 Jan13 15

SantaCruz* Jun12 Jan13 15

Mandy* Jun12 Jan13 11

Chinook* Jul12 Apr13 35

*Expectedpeakdateandproductionvolume


Alsocontributing

to

the

increase

in

2012

offshore

oil

production

is

the

start

up

of

the

Tahiti

Phase

2

redevelopmentproject,aswellasthosedeepwaterfieldsthatbeganproductionin2011butcontinued

toincreaseproductionduring2012. Onanannualizedbasis,however,FederalGOMoilproductionfor

2012willlikelybebelowits2011level,inpartbecauseoftheproductionshutinsthatoccurredduring

HurricaneIsaac. Thehurricanealsodelayeddevelopmentactivitiesatseverallocationsthroughoutthe

GulfofMexico,likelypushingsomelate2012scheduledproductionstartsinto2013.

EIAexpectsFederalGOMproductiontoincreasefromanaverage1.27millionbbl/din2012toan

average1.39millionbbl/din2013.Muchofthatincreaseistheresultofnewprojectsthatstarted

producingin2012butdonotreachpeakproductionuntillate2012orearly2013. AddingtoFederal

GOM

production

in

2013

will

be

a

combination

of

six

new

field

start

ups

with

a

combined

peak

productionofabout45,000bbl/d,andtheNaKikaPhase3redevelopmentproject(Table7).


14/15


Table7. FederalGOMDevelopingProjects

Project

Name

Start

Peak

Peak

mbbl/d

Clipper Feb13 Sep13 10

Goose Feb13 Sep13 5

Bushwood(Noonan) Feb13 Sep13 1.5

Nancy Feb13 Sep13 0.5

DannyII Feb13 Sep13 3

KnottyHead Jan13 Aug13 25

NaKikaPhase3 Sep13 Apr14 40

Jack Jan14 Aug14 50

St.Malo Jan14 Aug14 50

Entrada Mar14 Oct14 3

Dalmatian Mar14 Oct14 7

BigFoot Jun14 Jan15 50

TubularBells Jun14 Jan15 40

Lucius Sep14 Apr15 70

AtlantisPhase2 Sep14 Apr15 50

HadrianSouth Sep14 Apr15 5


ProjectedFederalGOMproductioncontinuestoincreasein2014,averaging1.45millionbbl/d,as

severalrelativelyhighvolumedeepwaterprojectsareexpectedonstream,includingtheJackSt.Malo

jointfielddevelopment,BigFoot,TubularBells,andLucius(Table7). Alsoexpectedonstreamduring

2014istheAtlantisPhase2redevelopmentproject. Combinedpeakoilproductioncouldbeinthe

rangeof

300,000

to

350,000

bbl/d

(although

later

2013

scheduled

start

ups

may

not

reach

peak

volumesuntil2014). Thetimingandvolumetriccontributionfromtheseprojectsisbasedonpublicly

availableprojectschedules,buttypicallytheactualprojectschedulesandvolumeswilllikelybedifferent

thanwhatiscurrentlyprojected. Figure6showshistoricalandanticipatedfuturedeepwaterfieldstart

upsintheFederalGOM,alongwithoilproductionoverthecorrespondingperiod.


15/15


Figure6.FederalGOM:deepwaterfieldstartupsandtotaloilproduction

Source:U.S.EnergyInformationAdministration,BureauofOceanEnergyManagement(BOEM),industryreporting.

Alaska

EIAestimatedthatAlaskaoilproductionwas526,000bbl/din2012. Withtheexceptionoftheinitiation

ofproductionatthePointThomsoncondensatefieldin2014at10,000bbl/d,nonewoilprojectsare

expectedto

begin

operations

in

2013

and

2014.

Overall,

Alaska

oil

production

is

projected

to

decline

in

both2013and2014,withcontinuingdeclinesinproductionfromexistingwells.EIAprojectsthat

productionwillaverage504,000bbl/din2013and474,000bbl/din2014.

Documents

Oil Forecast EIA Feb 2013