US Oil Supply in July 2014

Source: OPEC 7/19/2014, Location: North America

US production has been revised up by 130 tb/d from the previous assessment to stand at 12.25 mb/d, indicating a rise of 1.08 mb/d in 2014, the highest growth among all non-OPEC countries. This upward revision has affected all quarters, with the biggest change occurring in 2Q14 due to updated production data that was partly carried over to the rest of the year. The continued healthy growth of tight oil from North Dakota and Texas supported this trend, and the activated operation and new projects in the Gulf of Mexico (GOM) provided further support. The forecast risk remains high on weather and technical factors, especially with the impending hurricane season, which could impact output in the GOM. Upstream activity in the GOM - one of the leading offshore oil and gas regions - is being driven this year by a number of new discoveries, several field developments and enhanced production from new and existing fields. Recent discoveries in deep water (i.e. Amethyst) and deep gas (i.e. Tomcat prospect) could further boost US oil output while production is estimated to start in 2H14. Meanwhile, production has been boosted at the Cascade-Chinook development, while oil production has started in Na Kika Phase 3. Oil and gas field activities in the US continue to be centered on tight oil and shale formations onshore. Growth in crude oil production from those resources, for example in Texas and North Dakota, spurred by technology and efficiency gains, increased from 12% of total US production in 2011 to approximately half of US crude production in April 2014. Based on EIA’s actual data, US crude production in April 2014 was 8.4 mb/d, with Texas and North Dakota crude oil production volumes reaching 4.0 mb/d from April 2010 to April 2014, which accounts for nearly half of the total US crude production. Texas oil output reached 3.0 mb/d for the first time since the late 1970s, more than doubling production in the past three years, and North Dakota production passed 1.0 mb/d for the first time in history, nearly tripling its production over the same period. Crude oil production volumes in North Dakota and Texas grew at average annual rates of 37% and 28%, respectively, versus 2% average annual growth in the rest of the US. During this period, North Dakota and Texas's combined share of total US crude oil production rose from 26% to 48%. Biofuel production is projected to provide further support to US output in 2014 to meet renewable fuel requirements. However, price levels and blending economics remain risk factors for biofuel growth in 2014 as does the harvest season in 2013. On a quarterly basis, US oil supply in 2014 is expected to average 11.95 mb/d, 12.28 mb/d, 12.29 mb/d and 12.45 mb/d, respectively.

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