Since the beginning of 2010, US crude oil production has increased 1.6 MMb/d to just over 7.0 MMb/d. This growth has significantly reduced dependence on global waterborne imports. Imports have fallen from 8.5 MMb/d in January 2010 to 7.3 MMb/d in February 2013. Genscape expects the growth in crude oil production will continue over the next two years based on the current price environment with an additional +1.9 MMb/d from 2012 levels. However, using proprietary analytic models, Genscape is forecasting a temporary halt in production growth during the next few months , which may come as a surprise to market participants.
Two factors are contributing to this short-term change. First, BP is conducting maintenance in the Gulf of Mexico (GOM) on the Thunder Horse platform to work on its water flooding program. The Na Kika platform, which is in close proximity to Thunder Horse, is also down due to maintenance at the Pascagoula processing plant. The turnaround commenced on May 4 with volumes from both platforms dropping to zero. According to Genscape’s proprietary models, the Thunder Horse platform was producing 90 Mb/d in April, with the most recent Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) data showing the platform produced 73 Mb/d for December. The Na Kika platform was producing 81 Mb/d in April, according to Genscape’s estimates. Production is predicted to be offline for 45 day at Thunder Horse and 30 days at Na Kika.
Second, Alaska volumes will decrease as annual maintenance on the North Slope and the TransAlaska pipeline commence. The maintenance has historically affected around 100 Mb/d from May to July. According to the daily pipeline volumes reported by Alyeska, the operators of the TransAlaska pipeline, it appears maintenance may have commenced. Reported volumes for the first 12 days of May averaged 556 Mb/d, but from May 13-18 volumes dropped to an average of 465 Mb/d.
Combining both the Alaska and GOM maintenance, there could be as much as 175 to 250 Mb/d of production offline over the next two to three months. Continued growth from the Eagle Ford, Bakken and Permian will offset some of the production lost from maintenance, causing the overall growth rate to slowdown and remain flat during the maintenance period. This comes at a time when demand for crude in the U.S. is ramping up as spring turnarounds at refineries are ending and the summer demand for gasoline is increasing.
Genscape is forecasting that as the maintenance events wrap up production will again accelerate with nearly 500 Mb/d added between July and the end of 2013. The largest contributors to this growth include the South Texas Region, home to the Eagle Ford (+134 Mb/d), North Dakota, home to the Bakken (+78 Mb/d), the Permian Basin (+50 Mb/d) and the Gulf of Mexico (+58 Mb/d). Light crude production (API greater than 38° and less than 45°) will dominate the growth (+217 Mb/d), but condensate production (API greater than 45°) should not be overlooked with an additional 88 Mb/d added between July the end of the year.
Genscape’s U.S. Crude Oil Production Report offers a two-year production forecast every six weeks, providing a bottom’s up analysis using proprietary data covering more than 20,000 individual wells.
Source: Genscape