U.S. to supply half its oil needs – EIA

BY MICHAEL EBOH with Agency Report

United States’ domestic crude oil production is on track to surpass imports, according to Energy Information Administration, EIA.

The EIA said monthly crude oil production in the Lower 48 could surpass net imports this year for the first time since 1995, adding that by the end of next year, the gap between how much oil the U.S. imports and what it produces could grow to roughly two million barrels per day, as domestic oil output climbs past eight million barrels per day, the highest level since 1988.

According to the EIA, U.S. oil output, led by production from North Dakota’s Bakken and the Eagle Ford shale in Texas, is expected to climb to 7.3 million barrels per day this year from an average of 6.5 million barrels last year, rising to 7.9 million in 2014, according to a short-term energy outlook.

“At the same time, the share of total U.S. consumption of liquid fuels met by net imports, including crude oil, is expected to decline to 32%, the lowest level since 1985, from 40% last year,” the EIA said.

Commenting on the impact to Canada, Robert Mark, a director and research analyst at MacDougall, MacDougall & MacTier Incorporated in Toronto, said, “There is still a six-million barrel-a-day import market available to the Canadian producers.

“The issue is not that the market’s not there; the issue is that they can’t access the market — specifically the Gulf Coast.”
He said up to 3.5 million barrels a day of Canadian exports could still find a home in the U.S. market as the rapid growth of tight oil plays begins to taper.

“I don’t think the U.S. growth will continue at the rapid clip it has in the last two years,” he said. “There are some laws of diminishing returns on these plays. You pick the low-hanging fruit first and then as those production numbers get higher and higher it’s harder to grow at the same rate,” he added.

Also speaking, Peter Tertzakian, chief energy economist and managing director at ARC Financial Corp. in Calgary, said, “Canadian oil is faring well from a market-share perspective but not faring well from a price perspective.

“Canada is still very well positioned to take market away from others over the course of the next several years, but that’s not to say it’s not going to get progressively more competitive.

“Anybody bringing a new project online is going to have to factor that into their decisions.”