US Crude Oil Production to 2025

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US Crude Oil Production to 2025 U.S. Crude Oil Production to 2025: Updated Projection of Crude Types May 28, 2015 Independent Statistics & Analysis U.S. Department of Energy www.eia.gov Washington, DC 20585 This report was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA’s data, analyses, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in this report therefore should not be construed as representing those of the Department of Energy or other federal agencies. U.S. Energy Information Administration | U.S. Crude Oil Production to 2025 – Updated Projection of Crude Types i May 2015 Table of Contents Preface ......................................................................................................................................................... iii Summary ....................................................................................................................................................... 1 Context and background ............................................................................................................................... 5 Regions..................................................................................................................................................... 5 Classification of crude type ...................................................................................................................... 5 Data sources ............................................................................................................................................ 6 High Oil and Gas Resource case assumptions ......................................................................................... 7 High Oil Price case assumptions .............................................................................................................. 7 Low Oil Price case assumptions ............................................................................................................... 8 Regional analysis and results ........................................................................................................................ 8 Gulf Coast region ..................................................................................................................................... 8 Southwest region ................................................................................................................................... 10 Rocky Mountains region ........................................................................................................................ 11 Northern Great Plains region ................................................................................................................. 12 Midcontinent region .............................................................................................................................. 13 Alaska, Lower 48 Offshore, East, and West Coast regions .................................................................... 13 Table of Figures Figure 1. U.S. crude oil production by crude type, Reference case .............................................................. 1 Figure 2. U.S. crude oil production by crude type, in three cases ................................................................ 2 Figure 3. U.S. crude oil imports by crude oil type ......................................................................................... 3 Figure 4. Gulf Coast crude oil production – by crude type ........................................................................... 9 Figure 5. Southwest crude oil production – by crude type ......................................................................... 10 Figure 6. Rocky Mountains crude oil production – by crude type .............................................................. 11 Figure 7. Northern Great Plains crude oil production – by crude type ...................................................... 12 Figure 8. Midcontinent crude oil production – by crude type .................................................................... 13 Figure 9. Alaska, Lower 48 Offshore, East, and West Coast crude oil production – by crude type............ 15 Tables Table 1. Crude types considered in this analysis .......................................................................................... 6 U.S. Energy Information Administration | U.S. Crude Oil Production to 2025 – Updated Projection of Crude Types ii May 2015 Preface U.S. oil production has grown rapidly in recent years. U.S. Energy Information Administration (EIA) data, which reflect combined production of crude oil and lease condensate, show a rise from 5.6 million barrels per day (bbl/d) in 2011 to 7.5 million bbl/d in 2013, and a record 1.2 million bbl/d increase to 8.7 million bbl/d in 2014. Increasing production of light crude oil in low-permeability or tight resource formations in regions like the Bakken, Permian Basin, and Eagle Ford (often referred to as light tight oil) account for nearly all the net growth in U.S. crude oil production. EIA’s latest Short-Term Energy Outlook, issued in May 2015, reflects continued production growth in 2015 and 2016, albeit at a slower pace than in 2013 and 2014, with U.S. crude oil production in 2016 forecast to reach 9.2 million bbl/d. Beyond 2016, the Annual Energy Outlook 2015 (AEO2015) projects further production growth, although its pace and duration remains highly uncertain. Recent increases in domestic crude oil production and the prospect of continued supply growth have sparked discussion on the topic of how rising crude volumes might be absorbed. As EIA noted nearly two years ago, relaxation of restrictions on U.S. exports of crude oil is only one among several ways to accommodate growing near-term flows of domestic production (EIA, This Week in Petroleum, “Absorbing increases in U.S. crude oil production,” May 1, 2013). Recognizing that some options, such as like-for-like replacement of import streams, are inherently limited, the question of how a relaxation in current limitations on crude exports might affect domestic and international markets for both crude oil and products continues to hold great interest for policymakers, industry, and the public. In response to multiple requests, EIA is developing analyses that shed light on this question, including earlier reports on gasoline price determinants (EIA, What drives gasoline prices?, October 2014), changes in U.S. crude oil imports to accommodate increased domestic production (This Week in Petroleum, “Crude oil imports continue to decline,” January 23, 2014), options for refinery capacity expansion (EIA, Technical Options for Processing Additional Light Tight Oil Volumes within the United States, March 2015), and refinery responses to higher, but fixed, levels of domestic crude oil production under both current crude oil export restrictions and with unrestricted crude oil exports (Implications of higher domestic crude oil production for U.S. refining, May 2015). This report updates and extends a May 2014 EIA report, U.S. crude oil production forecast – analysis of crude types. It provides a projection of domestic crude oil production by crude type through 2025, supplementing the overall production projection provided in the AEO2015. Projections of production by crude type matter for several reasons. First, U.S. crude streams vary widely in quality. Second, the economics surrounding various options for the domestic use of additional domestic oil production are directly dependent on crude quality characteristics. Third, actual or potential export values also vary significantly with quality characteristics. In conjunction with other reports issued by EIA over the past year, this report provides a foundation for further analysis of the market outlook and the effects of a possible relaxation of existing restrictions on U.S. crude oil exports. U.S. Energy Information Administration | U.S. Crude Oil Production to 2025 – Updated Projection of Crude Types iii May 2015 Summary Recent U.S. crude oil production growth has consisted primarily of light, sweet crude1 from tight resource formations. Roughly 90% of the nearly 3.0 million barrel per day (bbl/d) growth in production between 2011 and 2014 consists of sweet grades with an API gravity2 of 40 or above. In the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook 2015 (AEO2015) this trend is projected to continue. In the AEO2015, U.S. supply of lighter API gravity crude oil continues to outpace that of medium and heavier crudes (Figure 1). Although the rate of growth in light sweet crude slows after 2015 in the Reference case, 65% of EIA’s projected production growth between 2013 and 2020 consists of sweet grades with an API gravity of 40 or above. Another 25% of the growth is attributable to an increase in Lower 48 offshore production, which is categorized as medium sour with an API gravity between 27 and 35. After 2020, tight oil production declines, as drilling moves into less productive areas. Figure 1. U.S. crude oil production by crude type, Reference case million barrels per day Reference case 15 Projection API 50+ sweet API 45-50 sweet 12 API 40-45 sweet 9 API 35-40 sweet API 35+ sour 6 API 27-35 med-sour API 27-35 sour 3 California API <27 sweet 0 API <27 sour Source: U.S. Energy Information Administration, Annual Energy Outlook 2015. The pace and duration of projected crude oil production
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