Rapid crude oil production growth in the Rockies will cause local refining and outbound pipeline capacity to face greater operational constraints, ultimately leading to weaker regional oil prices over the next few years.
EVERGREEN, CO (January 26, 2012) – BENTEK Energy, a leading energy markets information and analytics company, today announced the availability of the PADD 4 (Rockies) section of its Crude Awakening: Shale Boom Hits Oil
Market Alert, which reveals significant crude oil production growth of more than 77% will take place in the U.S. PADD 4 region by 2016. Fueled by the Niobrara Shale play and the Uinta Basin, gains in production of more than 282,000 b/d will increase the total share of U.S. crude oil produced in PADD 4 over the next five years. BENTEK’s Market Alert states that as a result of increasing PADD 4 crude oil production, transportation constraints will put downward pressure on regional prices.
With a small number of refineries in the Rockies, and only one refinery expansion planned over the next five years, most of the incremental oil production will have to be transported to other regions to be refined. Producers will heavily rely on rail and truck to transport crude oil out of PADD 4 because there are only a few major pipelines that currently take oil out of the region, and most of these systems run at high utilization rates. BENTEK’s Market Alert reports that despite the additional 240,000 b/d of pipeline capacity scheduled to come online by 2016, the projected PADD 4 supply increases will lead to transportation constraints and weak regional crude oil prices relative to West Texas Intermediate (WTI).
“The true potential of many of these production areas has not yet been fully realized,” noted BENTEK Senior Director, Energy Analysis, Adam Bedard. “If producers continue to unlock these emerging plays, such as the Niobrara and the Uteland Butte formation, production growth could accelerate even faster, exacerbating transportation constraints and deepening regional oil price discounts compared to WTI in Cushing, OK. This will also create an oversupply situation in the Rockies and could push out crude from Canada and increase competition with Bakken supply, which flows into the lower Rockies. Additionally, excess regional supply will flow east into PADD 2, putting additional pressure on the Cushing market.”
BENTEK’s Market Alert, Crude Awakening: Shale Boom Hits Oil
, provides a comprehensive review of the U.S. oil market and its potential growth over the next five years, including implicit industry challenges and implications. This Market Alert details current drilling and production activity in the most active U.S. and Canadian oil plays, including five-year production forecasts. The PADD 4 section of Crude Awakening: Shale Boom Hits Oil includes in-depth analysis on historical and projected supply within the PADD, production trends in key PADD 4 basins and regional demand. Analysis on existing and future PADD 4 transportation infrastructure, including pipeline utilization and expansion projects, is also included in the Market Alert.
For more information about BENTEK’s Crude Awakening: Shale Boom Hits Oil
Market Alert or BENTEK’s full line of Crude Oil Production Monitors
, go to www.bentekenergy.com
or call 1-888-251-1264. About BENTEK Energy
BENTEK is a leading energy markets information company. Based in Evergreen, CO, BENTEK brings customers the analytical tools and competitive intelligence needed to make time-critical, bottom-line decisions in today's natural gas, crude oil, NGLs and power markets. BENTEK is a business of Platts
, a leading global provider of energy, petrochemicals and metals information. Additional information about BENTEK Energy is available on the Web at www.bentekenergy.com