Daily Oil Bulletin
Natural Gas Liquids Production Steady, Storage Short

Monday, March 19, 2012

Although takeaway capacity of NGLs in the United States is currently constrained, 2.1 million bbls per day of new pipeline projects will offer some relief and even some overbuild in some regions, said Jennifer Brickle, a senior energy analyst with Bentek Energy LLC, a U.S.-based energy markets information and analytics company.

After decades of declining production, the U.S. experienced its third consecutive year of oil output growth in 2011. Bentek estimates that combined U.S. and Canadian oil production will grow more than 3.1 million bbls per day by 2016, reaching 12.1 million bbls per day and surpassing the previous record of 11.2 million bbls per day set in 1973. Bentek expects the U.S. to increase oil production 2.2 million bbls per day during this time, most of which will be light or intermediate crudes. In addition, crude oil imports into the U.S. are expected to rise by 900,000 bbls per day.

According to Bentek, the U.S. refining industry is expected to be the primary destination for Canada's additional crude supply. However, five of the six major pipeline systems that move crude across the U.S.-Canada border are either full or constrained, and pipeline takeaway capacity will be limited until new pipeline expansions come online.

Canadian crude oil production will grow 31 per cent to nearly four million bbls per day from 2011 through 2016, with almost all incremental supply transported to the U.S. Midwest and Gulf Coast for refining, says Bentek. This will lead to a 42 per cent or 917,000 bbls per day increase in Canadian crude exports to the U.S., affecting the already constrained refinery and transportation markets, it says.

A report by Bentek, Crude Awakening: Shale Boom Hits Oil, projects Canadian crude oil production growth of nearly one million bbls per day in Western Canada between 2011 and 2016 will stem predominantly from the oilsands in the Athabasca, Peace River and Cold Lake regions.

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