Waterborne oil imports to fall to 5% total US supply by '22

Friday, September 07, 2012

Growing US and Canadian crude oil production will nearly squeeze out waterborne foreign imports from the US market, to just 5% of total US crude supply by 2022, an oil analyst said Thursday.

Speaking at the Hart Energy Acquisitions & Divestitures conference in Dallas, Bentek Energy's Jodi Quinnell projected 4.1 MMBPD in US crude oil production growth in the next five years.

The majority of the growth will come from the Bakken, Niobrara, Utica and Eagle Ford Shale plays, and the Anadarko and Permian basins.

Domestic crude production will increase an additional 1.8 MMBPD between 2016 and 2022, she said.

Waterborne imports comprised about 45% of total US crude oil supply in 2011, according to Bentek, sister company of Gas Business Briefing.

Canadian crude oil production is expected to grow 1.2 MMBPD through 2016, with another 852 MMBPD added through 2022, Quinnell said.

The majority of the new Canadian crude supply will find a home in the Upper Midwest and Gulf Coast, though some crude will also reach the West Coast market, she added.

The substantial growth in Canadian crude oil production could hit a snag, however, as demand constraints and lack of pipeline capacity limit the ability of the supply to find a home in North America as early as 2018, Quinnell said, saying the supplies could be transported overseas.

"Those markets could be foreign markets, with the help of the Northern Gateway project and Kittimat," she said.

Quinnell said WTI prices will come under pressure to discourage foreign imports, reaching $72/Bbl by 2017.

This will push Brent to an even sharper premium over WTI, reaching $20/Bbl by 2017.

"We do see some Rockies prices tightening to WTI as capacity is added to relieve constraints," Quinnell said, adding that Permian Basin prices also will tighten to WTI's price.

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