U.S. crude oil production will reach a record high in 2018, despite Harvey’s impact on the industry.
U.S. crude oil production will grow in the remaining months of this year and reach its highest-ever annual average in 2018, despite the impact of Hurricane Harvey, the Energy Information Administration (EIA) forecast on Sept. 12.
The EIA also said that while refinery output declined by 3.1 million barrels per day (MMbbl/d) to an average of 14.8 MMbbl/d during the week of Sept. 1, that reduction would be balanced by a decline in petroleum product net exports.
U.S. crude oil production in August fell 40,000 bbl/d from July, averaging 9.2 MMbb/d for the month. But the EIA projects U.S. average crude oil production to reach 9.3 MMbbl/d for 2017 and 9.8 MMbbl/d in 2018—the highest annual average in U.S. history.
The 2018 record would surpass the 9.6 MMbbl/d average in 1970.
The Gulf of Mexico’s production also dropped by 70,000 bbl/d from July, averaging 1.6 MMbb/d for August.
The reduction could possibly contribute to larger-than-typical inventory draws for September, the EIA said. The EIA expects net petroleum product exports to average 1.1 MMbbl/d in September, down from an average of 2.9 MMbb/d in the first eight months of 2017.
Though Harvey set refinery operations back significantly from the 17.2 MMbbl/d seen in August, refinery runs are forecasted to increase from 15.3 MMbbl/d in September to 15.9 MMbbl/d in October.
The EIA forecasts North Sea Brent crude spot prices to average $51 per barrel in 2017 and $52 per barrel in 2018. West Texas Intermediate (WTI) average crude oil prices are expected to be about $2 per barrel lower than Brent prices in 2017 and 2018.
NYMEX contract values suggest that a range of $39 bbl to $63 bbl encompasses the market expectation for the December WTI prices at the 95% confidence level.
A looming uncertainty regarding the return of normal operations still exists for upstream production, refining, pipeline, and terminal and distribution infrastructure. EIA said it was too early to assess the impact of Hurricane Irma, which made landfall on Sept. 10.
Mary Holcomb can be reached at mholcomb@hartenergy.com
Recommended Reading
Second Light Oil Discovery in Mopane-1X Well
2024-01-26 - Galp Energia's Avo-2 target in the Mopane-1X well offshore Namibia delivers second significant column of light oil.
Sinopec Brings West Sichuan Gas Field Onstream
2024-03-14 - The 100 Bcm sour gas onshore field, West Sichuan Gas Field, is expected to produce 2 Bcm per year.
US Gas Rig Count Falls to Lowest Since January 2022
2024-03-22 - The combined oil and gas rig count, an early indicator of future output, fell by five to 624 in the week to March 22.
Deepwater Roundup 2024: Offshore Australasia, Surrounding Areas
2024-04-09 - Projects in Australia and Asia are progressing in part two of Hart Energy's 2024 Deepwater Roundup. Deepwater projects in Vietnam and Australia look to yield high reserves, while a project offshore Malaysia looks to will be developed by an solar panel powered FPSO.