Crude Awakening: Shale Boom Hits Oil


Combined crude oil production in the U.S. and Canada is poised to increase more than 36% by 2016.

After decades of declining production, the U.S. experienced its third consecutive year of oil production growth in 2011. Platts estimates that combined U.S. and Canadian oil production will grow more than 3,100 Mb/d by 2016, reaching 12,100 Mb/d and surpassing the previous record of 11,200 Mb/d set in 1973. Platts expects the U.S. to increase oil production 2,200 Mb/d during this time, most of which will be light or intermediate crudes. In addition, crude oil imports from Canada to the U.S. are expected to rise 900 Mb/d.

Crude Awakening: Shale Boom Hits Oil anticipates the significant increase in crude oil supply will outpace demand growth, leading to downward pressure on U.S. oil prices relative to WTI and a continuation of deep discounts to international prices. This Market Alert states that this will prompt foreign suppliers to seek other international markets for their light crude. Excluding Canada, Platts expects total U.S. imports of foreign oil to fall 41% or more than 2,800 Mb/d by 2016.

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. This Market Alert is made up of six individual reports, detailed below.

Crude Awakening: Shale Boom Hits Oil Market Alert includes the following sections:

Part 1 – PADD 4:  This section includes a broad overview of drilling and production activity in the Rocky Mountain region with a particular focus on three growing areas: the Niobrara play in the central Rockies; the changes taking place in the Uinta Basin; and a discussion of the oil flowing into PADD 4 from the Williston Basin and the interplay between the Williston and the Central Rockies plays. The report also includes a detailed review of regional transportation and refining expansions and a discussion of the projected regional supply-demand balance between 2011 and 2016. 

Part 2 – PADD 2:  This section provides a detailed overview of activity in the Bakken/Three Forks formation in the Williston Basin of North Dakota. It also includes an examination of the Utica play in Ohio, multiple liquids-rich plays in the Anadarko Basin, planned inbound pipeline expansions in PADD 2 and an overview of supply and demand changes that are expected to affect the Cushing (WTI) market between 2011 and 2016. 

Part 3 – Canada:  This section includes an overview of activity in Alberta’s oil sands areas, including a summary of major projects, a detailed review of major pipelines and infrastructure expansions and a discussion of market dynamics that will drive a growing amount of Canadian oil to U.S. refineries and potentially overseas markets. 

Part 4 – PADD 3:  This section includes an update and forecast of production growth in the Permian Basin and Eagle Ford play, a review of the planned regional transportation and refinery expansions and a discussion of how these supply and demand changes will impact regional prices and waterborne oil imports. 

Part 5 –  PADDs 1 and 5:  This section examines the recent activity and market changes taking place on the East and West coasts and a discussion of how these isolated market areas are expected to change over the next five years. 

Part 6 – North American Perspective:  The final section includes Platts crude oil production forecast for each U.S. PADD region and Canada through 2022. The report provides an analysis of how growing oil production will influence U.S. waterborne imports and price spreads to global benchmarks. Section 6 details the crude oil market dynamics in each U.S. PADD region and Canada, including current and planned transportation and infrastructure build-outs, with a special section dedicated to the Williston Basin.