BMI View: The US will continue to lead gains in non-OPEC crude oil production over the next decade despite the fall in oil prices . High growth rates seen in recent years will moderate through our 10-year forecast period , reflecting abrupt depletion rates in shale oil fields, a glut in the domestic market for light sweet crude , and lower oil prices dampening some production . Consumption o f fuels will be largely stagnant throughout the course of the next decade as energy efficiency gains take root. I n the gas market, we forecast a ramp - up in production when demand gears up from 201 6 onwards as new LNG export facilities and pet ro chem ical plants come online.
|e/f = BMI estimate/forecast. Source: EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||12,887.0||13,782.5||12,984.2||12,896.7||13,247.6||13,560.1||13,852.6|
|Refined products production, 000b/d||19,489.6||19,957.7||20,194.8||20,332.9||20,440.2||20,505.4||20,566.5|
|Refined products consumption & ethanol, 000b/d||19,872.9||20,267.4||20,497.5||20,673.3||20,743.2||20,796.0||20,841.3|
|Dry natural gas production, bcm||728.1||765.9||792.7||828.4||869.8||904.6||936.3|
|Dry natural gas consumption, bcm||759.3||781.3||796.9||814.4||834.8||851.5||868.5|
We have downgraded our US oil production forecast as continued downside pressure on oil prices restrains investment into unconventional plays. Falling oil prices, especially on the WTI contract, have begun to pressure developments in the core of the US oil industry. As efficiency gains dwindle, we now expect the decline in shale output will outweigh gains from deepwater projects in 2016, resulting in a contraction for the year. With prices now trading below USD40/bbl, we caution that even more profitable 'sweet spot' areas will suffer from declines over the coming quarters.
A further deceleration in drilling and completion activity will exacerbate the slowdown in US shale oil production in H116. The pullback in production will support crude prices later in the year, encouraging the most efficient producers to resume upstream development. The strengthening of crude prices in H216 will not usher in a revival of shale oil production. Producers will be under continued pressure to operate amid tight financing conditions, suggesting y-o-y growth will not return before oil prices average USD55-60/bbl, forecast for late 2017.
The lifting of the US's 40-year crude export ban on December 18 is driving an increase in net imports into the US, due both to thinning export volumes and a growing demand for imported oil. This shift in trade flows has been driven by changes in the price differentials between domestic US and international crudes, pulling US benchmark WTI closer to parity with global benchmark Brent. As the spread between WTI and Brent is broadly what dictates the arbitrage between domestic and imported grades, imports have become more attractive, while exports less so.
Milder weather conditions are the main contributing factor to weakened demand for natural gas, prompting further downside in Henry Hub benchmark prices. Trading below USD1.75/mn British Thermal Unit at time of writing. Given the likelihood of further price declines, key US producers will face a more challenging operating environment, raising the possibility of more pronounced production pullbacks.
Demand for refined petroleum goods in the US is nearing a peak as structural changes within the market discourage higher consumption levels. Namely, strict fuel economy targets being implemented in the US along with higher blending mandates for biofuels will weaken consumer demand for fuel over the next decade in spite of lower prices at the pump.
The United States Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for United States including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's United States Oil & Gas Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and competitive intelligence on the American oil and gas industry.
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BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering oil and gas reserves, supply, demand and refining, plus analysis of landmark company developments and key changes in the regulatory environment.
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Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the upstream and downstream sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecast:
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BMI’s Oil & Gas Risk Reward Index
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A profile of the upstream and downstream sectors, including analysis of reserves, output, consumption and trade of energy products; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments.
Comparative company analyses by USD sales, % share of total sales, number of employees, year established, ownership structure, oil production (‘000b/d), gas production (bcm), downstream capacity (‘000b/d) and % market share.
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Regional perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.
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Based on our country coverage of over 99% of global oil and gas production and consumption, BMI provides demand, supply and price forecasts to end-2024 for oil, gas and oil products.
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