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Tight oil remains the leading sourse of future U.S.crude oil production

EIA’s recently released Annual Energy Outlook 2018 (AEO2018) Reference case projects that U.S. tight oil production will generally increase through the early 2040s, when it will surpass 8.2 million barrels per day (b/d) and account for nearly 70% of total U.S. production. Tight oil production made up 54% of the U.S total in 2017. Development of tight oil resources is more sensitive than nontight oil to different assumptions of future crude oil prices, drilling technology, and resource availability, but tight oil remains the largest source of U.S. crude oil production in all of the AEO2018 sensitivity cases.

U.S. crude oil production in AEO2018 reference case, as explained in the article text

Source: U.S. Energy Information Administration, Annual Energy Outlook 2018

Recent growth in U.S. crude oil production has been driven by the development of tight oil resources, primarily in the Permian Basin. Three major tight oil plays in the Permian Basin—the Spraberry, Bone Spring, and Wolfcamp—accounted for 36% of U.S. tight oil production in 2017. Production from these three plays is projected to increase and to account for 43% of cumulative tight oil production through 2050 in the Reference case. The Bakken and Eagle Ford formations remain major contributors to U.S. tight oil supply through 2050, accounting for 20% and 17% of cumulative tight oil production in the Reference case, respectively.

In the AEO2018 Reference case, tight oil production increases to 8.2 million b/d in the early 2040s and then remains relatively constant through 2050 as development moves into less productive areas. As a result, total U.S. oil production is expected to increase over the next 20 years, from 9.3 million b/d in 2017 to nearly 12 million b/d in the early 2040s, and then decrease slightly through 2050.

However, future growth potential of domestic tight oil production depends on the quality of resources, technology and operational improvements that increase productivity and reduce costs, and market prices—factors with futures that are both interconnected and uncertain. AEO2018 includes several sensitivity cases that incorporate different assumptions regarding price, technology, and resource recoverability.

U.S. crude oil production in threee AEO2018 cases, as explained in the article text

Source: U.S. Energy Information Administration, Annual Energy Outlook 2018

The High Oil and Gas Resource and Technology case uses more optimistic technology and resource assumptions than in the Reference case under the same base world oil price assumptions. In this case, tight oil production increases throughout the projection period, reaching 14.6 million b/d by 2050, or 77% of total U.S. production, as higher productivity reduces development and production costs.

In the Low Oil and Gas Resource and Technology case, which uses more pessimistic technology and resource assumptions under the same base world oil price assumptions, tight oil production still increases from its current level, reaching 5.6 million b/d in 2021, and then decreases to 4.4 million b/d by 2050. Total U.S. oil production in 2050 in this case reaches 7.2 million b/d, which is well below the Reference case level of 11.3 million b/d.

U.S. crude oil production in threee AEO2018 cases, as explained in the article text

Source: U.S. Energy Information Administration, Annual Energy Outlook 2018

Oil production is also sensitive to prices. The AEO2018 contains two cases that assume higher and lower oil prices under the same resource and technology assumptions as in the Reference case. In the High Oil Price case, where West Texas Intermediate (WTI) spot prices rise rapidly and are sustained at higher levels, domestic crude oil production increases to nearly 15.0 million b/d by 2030, before declining to 12.2 million b/d in 2050. In this case, tight oil production reaches more than 10.0 million b/d in 2025 (double the 2017 rate of 5.0 million b/d) as higher prices increase the pace of drilling. Tight oil production then declines to 8.4 million b/d in 2050 as drilling moves to less productive areas.

In the Low Oil Price case, sustained low oil prices still allow total domestic production to increase from 9.3 million b/d in 2017 to 9.7 million b/d in 2021 before gradually declining through the rest of the projection. Tight oil production is relatively flat through 2050, averaging near 5.0 million b/d, and accounts for 64% of total domestic oil production in 2050.

SK Innovation discovers oil in South China Sea

SK Innovation has discovered oil in the Pearl River Mouth Basin (PRMB) block 17/03 in the South China Sea, the energy company said Thursday.


This marks SK Innovation’s first discovery in the area since its decision to push forward with offshore oil exploration projects as an operator in the South China Sea.

Malaysian state energy firm secures maiden term LNG supply agreement to India

KUALA LUMPUR, Feb. 22 (Xinhua) -- Malaysian state energy firm Petronas has secured its first term liquefied natural gas contract to India.


The oil and gas company said in a statement Thursday, its subsidiary, Petronas LNG Ltd. (PLL) signed a sale and purchase agreement with Indian Hiranandani Group's subsidiary H-Energy Mideast DMCC (HEMD) for the supply of LNG to India.

Offshore oil recovery beginning in world's harshest environments

HOUSTON (Bloomberg) -- Explorers are once again testing the waters in their search for oil, according to Transocean Ltd., the world’s biggest offshore rig contractor by market value.


Drillers worldwide are forecast to boost new commitments for all types of offshore work by 140% this year, Jeremy Thigpen, Transocean’s CEO told analysts and investors in a conference call on Wednesday. Thigpen said he’s excited about opportunities to drill off the coast of Norway, the UK and Canada.

Baker Hughes surges as GE says it's keeping stake through pact

HOUSTON (Bloomberg) -- Baker Hughes has cleared one obstacle on its recovery path.


General Electric Co. told investors Wednesday it has no plans to alter its majority ownership stake in the world’s third-biggest oilfield services and equipment provider prior to the end of their two-year lockup period in 2019.

The Krk Island LNG Debate at CEE Gas 2018

In December, the European Union granted 101.4 million euro ($126.1 million) to support the construction of the offshore LNG terminal on Krk island. It is designated an EU Project of Common Interest. Additionally, the Croatian government has declared the project of strategic importance to the region. This is significant as it gives the project priority and pushes for early completion.

The development of the offshore LNG terminal supports the key objectives of the Energy Union as it will promote further integration of the internal energy market and enhance security of supply. The terminal is set to secure the energy needs of the region and reduce dependence on Russian gas by securing new supplies for Central and South-Eastern countries.

Miguel Arias Cañete, EU Commissioner for Climate Action and Energy stated that “this investment will not only allow for the supply of natural gas to Croatia and Hungary; it will also increase the diversification of energy sources of Central and South-Eastern Europe and give an economic lift to the region.”

LNG Croatia, the company developing the import terminal on Krk island, intends to implement the project in two phases. Firstly, the construction of a floating terminal followed by a land-based terminal. Yet Gasfin, a private provider of mid-scale LNG infrastructure, has stated that it can bypass the two-phase development and immediately begin work on an onshore production site. This pause in development has left everyone asking what will happen next.

The project is critical for the whole Central & Eastern European region. The two project leads are set the clarify their positions at the CEE Gas conference in Zagreb, in March. This is a unique opportunity to get insight into these fundamental developments.

Attend the CEE Gas Conference in Zagreb this March to see the debate between the heads of both Gasfin and LNG Croatia.

About CEE Gas 

With over 30 years of European and global gas market partnership expertise, dmg :: energy events hosts Central & Eastern European Gas Conference (CEE Gas) in Zagreb, Croatia on 7 - 8 March 2018. The event launched in 2017 and was hugely successful; creating the most senior gathering of natural Gas and LNG leaders ever seen in the region.

Bringing together all key stakeholders including gas suppliers, TSOs, regulators, government members, commercial executives and industry consultants, CEE Gas will provide an unrivalled platform for the strategic roadmap to a diverse and secure natural gas future for the region.

On the 7-8 March 2018 the Central & Eastern European Gas Conference will return to Zagreb. Building on the success of the 2017 event, CEE Gas 2018 will once again bring together business, government and regulatory leaders from across the CEE region, Western Europe and the rest of the world.


CEE Gas 2018 will focus on these key challenges:

Energy Supply - Deliver affordable power while still hitting national COP-21 targets

Market Liberalisation - Implement a fully liberalised and market driven energy landscape across each country in the region

Infrastructure Construction and Development - Understand how to accurately measure project economics and implement construction across multiple jurisdictions

Market Integration - Create a liquid gas and power market across CEE and the rest of the EU


HIGH PROFILE SPEAKERS INCLUDE:


If you would like to know more about the conference or are interested in interviewing any of the speakers, please feel free to contact me.

For more information please see: http://www.theceegas.com/