Steven Poruban
Managing Editor-News
Oil and gas industry leaders echoed a cautiously optimistic viewpoint when voicing their near-to-medium-term market outlooks presented Mar. 6 at CERAWeek by IHS Markit in Houston.
According to a recent 5-year oil market forecast from the International Energy Agency, Oil 2017, the world's oil supply will lag demand after 2020, risking a sharp rise in prices unless new investments are approved soon (OGJ Online, Mar. 6, 2017). IEA Executive Director Fatih Birol presented the report's findings at CERAWeek.
Expansion of the world's oil supply is currently being led by US shale production, Birol noted. "We are witnessing the start of a second wave of US [shale-oil] supply growth and its size will depend on where prices go," he said.
IEA expects a continuation of increasing global demand, although the pace of growth will slow. Also, although world oil demand is not expected to reach a peak any time soon, IEA does expect world demand to reach 100 million b/d by 2019, Birol said.
China and India compose half of the world's demand growth, he noted, with most of this demand stemming from transportation and petrochemicals.
Supply, infrastructure
In the next few years, oil supply will increase from the US, Canada, and Brazil and elsewhere but this growth could stall by 2020 if the record 2-year investment slump of 2015 and 2016 is not reversed.
Oil supplies from Nigeria, Algeria, and Venezuela, meanwhile, are expected to decline, Birol said.
While investments in US shale plays are picking up strongly, early indications of global spending so far this year are "not encouraging," IEA's forecast said.
In 2016, there was a total of $415 billion in investments for projects worldwide, Birol said, noting that this total would have to be 20% higher in 2017 to meet the world's projected demand growth.
Al Monaco, president and chief executive officer of Enbridge Inc., lamented that industry's real challenge lies in opposition to infrastructure development. For some reason, he said, this opposition is "targeting pipelines" as of late.
Commenting on permitting and construction of new systems, especially those crossing country borders, Monaco said, "What used to take 2 years now takes 4 years." He added, "If we don't get better at infrastructure, we'll miss out on export opportunities."
Noting that the Keystone XL pipeline has gone through 6 years or longer of permitting, US Sen. Daniel Sullivan (R-Alas.) noted it was sad to see the "raw political abuse" and "politicization" of certain projects.
Sullivan noted that the new administration of US President Donald J. Trump has expressed a desire to partner with producing states like Alaska to rebuild America's infrastructure. "We've never had a better chance to seize these opportunities," he said.
Sullivan also said that it is the federal government's role to grow the economy, not to act as a regulatory block.
Darren Woods, chairman and chief executive officer of ExxonMobil Corp. took the speaking engagement as an opportunity to highlight the major's "Growing the Gulf" expansion initiative. ExxonMobil will expand its manufacturing capacity along the US Gulf Coast through $20 billion in planned investments over 10 years to take advantage of the "American energy revolution," Woods said.
The projects, at 11 proposed and existing sites, are expected to generate thousands of high-paying jobs and $20 billion in increased economic activity in Texas and Louisiana, Woods said.
The initiative consists of 11 major chemical, refining, lubricant, and LNG projects at proposed new and existing facilities along the Texas and Louisiana coasts. Investments began in 2013 and are expected to continue through at least 2022, Woods said.
