In its recent 5-year Global Crude Oil Outlook, ESAI Energy projects healthy non-OPEC supply growth to 2023.
The outlook highlights three trends that underscore the expectation that non-OPEC crude and condensate supply will increase by an average of 1 million b/d/year during 2019-23:
• Infrastructure catching up with US shale growth.
• Streamlined, cost-effective offshore projects from the Gulf of Mexico, Latin America, and the North Sea brought to production.
• Russia moving to a “coordinated” growth strategy.
Still, US shale remains the obvious key driver, ESAI said, pointing to a decrease in drilling time and an increase in initial production rates with longer laterals and “super-fracs.” Additionally, many shale producers have brought down debt and increased shareholder returns in the past year. Higher prices increased cash flow, and living within their means paid-off, shown by improved bottom lines on quarterly financial reports, ESAI said, and Permian production has benefited, held back only by infrastructure.
“There is a misperception that a supply crunch is imminent,” said ESAI Energy’s Sarah Emerson. “In a 5-year horizon, the potential for non-OPEC supply growth is impressive. This will have a bearing on the degree to which OPEC will have to dip into spare capacity to offset disruptions.”