BMI View: The US will 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 a portion of upstream investment . Fuels c onsumption growth will temper over the next decade as efficiency gains take root. I n the gas market, we forecast a ramp - up in production as new LNG export facilities and pet ro chem ical plants come online.
|f = BMI forecast. Source: EIA, BMI|
|Crude, NGPL & other liquids prod, 000b/d||12,995.6||14,023.8||13,431.1||13,535.0||13,850.0||14,220.4||14,625.3|
|Refined products production, 000b/d||19,654.0||19,893.0||19,966.5||20,023.5||20,058.6||20,051.3||20,020.6|
|Refined products consumption & ethanol, 000b/d||20,075.0||20,400.6||20,545.8||20,696.1||20,747.3||20,788.3||20,798.6|
|Dry natural gas production, bcm||728.5||765.3||779.1||804.0||841.0||876.3||908.8|
|Dry natural gas consumption, bcm||756.0||777.9||788.8||806.2||827.9||846.2||863.1|
Latest Updates And Key Forecasts
As the US market continues to rebalance, operators and oilfield service (OFS) providers await a more pronounced recovery in oil prices that would persuade an uptick in upstream activity. After a volatile H116, benchmark prices are now expected to stabilise above the USD40/bbl mark for the remainder of the year, encouraging shale developers to reassess, and eventually increase their investment plans for the first time since the downturn.
Job cuts and the limited number of high horsepower rigs will limit the strength of US onshore production growth once oil prices recover. Improving oil prices will contend with rising drilling and completion costs as OFS providers capitalise on growing demand to mend their respective balance sheets. We maintain our view that production growth will return in 2017 on the back of rising unconventional production, but at a more modest pace than in years prior.
US oil and gas production will return to growth in 2017 regardless of the outcome of the upcoming US federal election. Deflated production costs coupled with stronger benchmark prices will encourage investment back into the sector, generating y-o-y output growth by H217. Global pricing and demand dynamics will ultimately determine the overall pace of growth as the US becomes increasingly interconnected with the global crude market.
Higher US natural gas prices are sufficient to support growth from the improved cost structures in the Marcellus shale play, accelerating the growing dominance of the formation as a proportion of US natural gas supply. Over the last two years some of the key independent producers in the Marcellus have reduced the cash cost of production to under USD2.00/mnBTU. Attractive cost structures combined with higher gas prices could result in stronger-than-expected production over H216.
The narrower spread between WTI and Brent will remain in play over H216 as the global market rebalances, despite much of that correction coming from the US. This will close overseas arbitrage opportunities and limit demand for US crude exports.
The price-elastic US consumption has reacted strongly to low prices at the pump, increasing both vehicle miles travelled and the use of less fuel-efficient vehicles. While the demand outlook for gasoline is positive for 2016, on the supply side bulging stockpiles will cap fuels prices over the remainder of the year.
The opening of the expanded Panama Canal on June 27 is a positive development for US trade. The new locks enable wider vessels to transit the canal, creating significant opportunities for US LNG exporters. Shorter transit times and lower shipping costs will support the flow of US volumes to Latin America. Only 1.2mntpa (1.7%) of contracted US volumes are designated for Latin America, specifically to Chile. However, we believe a share of contracted volumes with unspecified destination clauses, as well as spot market cargoes, making up a total of 33.1mntpa, are likely to head south.
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.
- Benchmark BMI's independent oil and gas industry forecasts for United States to test consensus views - a key input for successful budgeting and strategic business planning in the American oil and gas market.
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- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity) and Competitive Landscape Tables.
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.
Industry SWOT Analysis
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:
- Pricing: Oil price (USD/bbl, WTI, Brent, OPEC basket, Urals); oil products prices (unleaded gasoline, gasoil/diesel, jet/kerosene – USD/bbl) at global hubs.
- Production, Consumption, Capacity & Reserves: Proven oil reserves (bn barrels), production, consumption, refinery capacity and throughputs (‘000b/d); proven gas reserves (tcm), production and consumption (bcm) and fuels trade.
- Imports & Exports: Crude oil exports/imports (‘000s b/d) and value of crude oil trade in USD. Fuels exports/imports (‘000s b/d) and value of fuels trade in USD. Natural gas imports/exports (bcm), by pipeline and/or LNG, and value of natural gas trade.
BMI’s Oil & Gas Risk Reward Index
BMI’s Risk Reward Indices provide investors (independents, NOCs, IOCs, oil services companies) looking for opportunities in the region with a clear country-comparative assessment of the upstream and downstream market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
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.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Regional perspective on size and value of the industry. Plus comparative rankings by production, refining, imports and exports of oil, gas and LNG.
Global Oil Market & Oil Products Outlook
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.
The Oil & gas Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.