HOUSTON, June 30, 2011 /CNW/ -- New domestic shale oil production and the increasing supply of Canadian crude is straining current infrastructure resulting in significant price dislocations. New transportation projects are being added, but the pace and location may not coincide with anticipated production growth. The U.S. Midcontinent Crude Oil Market Analysis represents Purvin & Gertz, Inc.'s findings related to increasing North American production developments and its projected impact on U.S. crude logistics, refining balances and pricing. The focus of this analysis is the overall crude oil supply/demand balance and pricing of the greater U.S. Midcontinent area. The service provides a detailed crude oil production outlook for the major liquid-rich shale plays (i.e. Bakken, Eagle Ford, and Niobrara), conventional crude production by state for PADD's II - IV and Western Canada bitumen, synthetic and conventional crude oil production. Current and expected pipeline, rail and other logistic projects between producing areas and key storage and refining hubs are analyzed utilizing a model that economically optimizes crude movements and predicts potential bottlenecks impacting crude trade flows and pricing. The service utilizes the results of the production and crude balances analyses to forecast expected price differentials between key Midcontinent benchmark crude oils (i.e. West Texas Intermediate and Bakken) relative to U.S. Gulf Coast (USGC) and other international crude oils. The study complements other Purvin & Gertz' multi-client services utilizing the same economic, energy and petroleum demand outlooks.
Our analysis is accompanied by a written report, which summarizes key methodologies and highlights major events and projects impacting overall production, crude flows and pricing. Forecasts for shale oil production include both a base case and a high case outlook, utilizing more optimistic outlooks for key forecast variables, including rig activity, well completions and production rates. Forecasts for crude oil production are provided through a horizon year of 2030. Crude flows between major producing areas and key storage and refining centers provide detailed balances by crude quality through 2020 under two separate scenarios - a base case scenario utilizing our base production outlook and logistics projects following estimated completion dates and an alternative case where higher shale oil production encounters unexpected delays in some key pipeline projects. Price differentials for both West Texas Intermediate (WTI) and Bakken relative to global benchmarks are presented based on the results of the crude oil balance analysis for each scenario. The pricing results are presented annually through a horizon year of 2020, with a detailed quarterly outlook between the key years of 2010 - 2015. Other key Canadian, USGC and international crude oil prices are provided as reference.
Our staff is available to answer questions and give clients general assistance on using the information in the reports and numerical tables. A presentation of the results and outlook can be accommodated at cost to subscriber, based on additional preparation and travel time plus expenses.
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Subscription to this service includes unlimited online access to the reports and forecasts by employees of a purchasing company only. All numerical data is available in Microsoft Excel® spreadsheets and the written report is offered in Adobe® PDF format. The service, reports and forecast are for the exclusive use of the purchasing company and its wholly-owned subsidiaries (i.e. 100% ownership), or for the purchasing company and its parent company if the parent company owns 100% of the purchasing company.
This service, reports and forecasts are provided for the sole benefit of the subscriber. Neither the report, portions of the report, forecasts nor access to this service (in the form of user identification and password codes) shall be provided to third parties without the written consent of Purvin & Gertz. Any third party in possession of the report or forecasts may not rely upon their conclusions without the written consent of Purvin & Gertz. Possession of the report or forecasts does not carry with it the right of publication.
Purvin & Gertz has conducted analyses and prepared results utilizing reasonable care and skill in applying methods of analysis consistent with normal industry practice. All results are based on information available at the time of review. Changes in factors upon which the work is based could affect the results. Forecasts are inherently uncertain because of events or combinations of events that cannot be foreseen including the actions of government, individuals, third parties and competitors. NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY.
Some of the information on which this service is based has been provided by others, including published data. Purvin & Gertz has utilized such information without verification unless specifically noted otherwise. Purvin & Gertz accepts no liability for errors or inaccuracies in information provided by others.
KEY HIGHLIGHTS FROM THE ANALYSIS
-- Shale oil production from the Bakken, Eagle Ford and Niobrara plays
will approach 900,000 B/D in 2015 and exceed 1.3 million B/D by 2020
predicated on our base case assumptions for rig activity, well
completions and well production rates.
-- Total Western Canadian oil supply is forecast to rise significantly,
exceeding 4.0 million B/D by 2020, in response to the rapid rise in
sands project development (both bitumen and synthetic crude oil -
-- The addition of planned pipeline capacity from Cushing to the USGC
provides enough capacity to relieve the current tight conditions in
Cushing market and will significantly reduce current WTI discounts.
-- Projected crude flow increases from Western Canada and Bakken to the
Midwest will result in a bottleneck for crude movements out of the
Chicago region by 2017 (similar to the current Cushing situation).
-- The constrained Chicago outbound pipeline situation will result in a
significant reduction in sweet crude oil prices in the market, thus
creating strong incentives to add transportation capacity south or
-- The increasing supplies of light sweet crude from the shale oil plays
will reduce requirements for waterborne foreign imports of similar
quality into the USGC by greater than 0.5 million B/D in the next five
This study is of strategic interest to U.S. and Canadian crude oil producers, refiners, transportation and service companies with commercial interests in the petroleum and refining industry. For more information, please contact Mr. Geoff Houlton in our Houston Office at firstname.lastname@example.org or +1.713.331.4000 or Mr. John Heida in our Calgary Office at email@example.com or +1.403.984.2200.