IPAA finds slow response to higher prices


WASHINGTON, DC�The Independent Petroleum Association of America predicts US petroleum consumption (including NGL) will average 7.83 million b/d in 2001, up 0.7% from 2000. Imports of crude and products will average 11.30 million b/d, up 1.8%. Crude imports alone will climb 0.9% to 9.24 million b/d.


WASHINGTON, DC�The Independent Petroleum Association of America predicts US petroleum consumption (including NGL) will average 7.83 million b/d in 2001, up 0.7% from 2000. Imports of crude and products will average 11.30 million b/d, up 1.8%. Crude imports alone will climb 0.9% to 9.24 million b/d.

IPAA's Supply and Demand Committee said US yearend crude stocks will average 976 million bbl, up 1% from 2000. Total product stocks are anticipated to rise 1.3% to 676 million bbl.

US petroleum demand in 2001 is forecast at 19.87 million b/d, 1.3% higher than in 2000. That includes 8.61 million b/d in gasoline imports.

On the supply side, the committee said more output from the deepwater Gulf of Mexico will offset a decline in Alaska production. It noted that the Lower 48 states "continue to be extremely slow to respond to the rebound in the crude oil prices, meaning that total US crude production in 2000 will rise a meager 0.1% to 5.93 million b/d, and total production, including NGL, to 7.72 million, up 0.2%."

IPAA said all factors indicate a substantially delayed increase in US oil production.

"Rotary rigs searching for crude oil still are down 60% from the 10-year average of last decade of 400 rigs. The number of workover rigs now totals 1,000, well short of the 1,400-1,500 that should be active, given the rise in crude oil prices."

Gas outlook
The committee forecast US natural gas consumption in 2001 at 22.56 tcf, up 1.7% from 2000.

"After flirting with 22 tcf for years, the committee believes that demand finally will surpass the previous consumption peak way back in 1972," said API.

Consumers will use 20.624 bcf, up 1.8% from 2000. Industrial demand will climb 2.5% to 9.14 tcf, electric utilities will drop 1% to 3.18 tcf, the commercial sector will rise 2.1% to 3.3 tcf, and the residential sector will increase 2.1% to 5 tcf. Another 1.9 tcf will be used by gas leases, plants, and pipelines.

IPAA said, "Despite a number of proposed gas-fired generation plants projects for 2000 and 2001, it is unclear how many of these plants will be completed on time."

US gas production will climb 1% to 18.9 tcf in 2001, supplemented by 3.9 tcf of imports, which will be up 5.7%. The committee predicted that the Gulf of Mexico will account for most of the 2000-01 growth in natural gas supply.

IPAA said about 10.95 bcfd of gas must be stored this summer for industry to return to the level of 3 tcf of storage by winter. "In addition to meeting seasonal demand, storage is increasingly used to capture the value of price differentials between periods and regions. This picture may set the natural gas markets up for an extremely tight gas market during the winter of 2000-01."

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