Can the U.S. be headed toward greater domestic supplies?
NEW ORLEANS -- "If we are not producing more oil four years from now … I will dress up in a white unitard."
Ready to see Tom Kloza in the sexy one-piece? The OPIS chief oil analyst told petroleum marketers at last week's SIGMA annual meeting that the ingredients are in place for a resurgent U.S. energy play.
Buoyed by ample natural gas resources in the United States and Canada, America could drastically cut its dependence on foreign oil over the decade. Kloza cited the TMC forecast, which projects production of an additional 4.4 million barrels per day in North America by 2020, with growth in PADDs 2 and 3 (Midwest and Gulf Coast).
The prediction is based on certain assumptions, most importantly reasonable stability in the Middle East and overseas crude ranging between $90 and $120 a barrel.
A key source to drive greater domestic production is the Bakken oil shale, which stretches from Canada to North Dakota and Montana and is located in the Williston basin. According to oil experts, natural gas production in the basin could increase nearly six-fold by 2025 over current levels, a conclusion drawn by Bentek Energy in a report commissioned by the North Dakota Pipeline Authority and North Dakota Industrial Commission.
The other great hope is Canada. In fact, just two months ago, the U.S. Energy Information Agency (EIA) completed a report outlining Canada as not only one of the world's five largest energy producers but the principal source of U.S. energy imports.
"Canada is a net exporter of most energy commodities and is an especially significant producer of conventional and unconventional oil, natural gas, and hydroelectricity," the report said. "It stands out as the largest foreign supplier of energy to the United States, its southern neighbor and one of the world's largest consumers of energy. Just as the United States depends on Canada for much of its energy needs, so is Canada profoundly dependent on the United States as an export market; however, economic and political considerations are leading Canada to consider ways to diversify its trading partners, especially by expanding ties with emerging markets in Asia."
With that understanding, Kloza said that he believes it's a matter of time before the Keystone XL Pipeline project, which the Obama administration earlier nixed due to environmental concerns, will ultimately go forward. The pipeline system would transport synthetic crude oil from the Athabasca Pil Sands in Alberta to various destinations in the United States. The project would route product to refineries in Illinois, the Cushing Oil distribution hub in Oklahoma and refineries along the Gulf Coast of Texas.
And from this potentially growing energy picture, Kloza said, "North America will have much cheaper crude than the rest of the world."