Analysis & Projections

U.S. Crude Oil Production Forecast-Analysis of Crude Types

Release date: May 29, 2014


Preface

U.S. oil production has grown rapidly in recent years. U.S. Energy Information Administration (EIA) data, which reflect combined production of crude oil and lease condensate, show a rise from 5.7 million barrels per day (bbl/d) in 2011 to 7.4 million bbl/d in 2013. EIA's Short-Term Energy Outlook (STEO) projects continuing rapid production growth in 2014 and 2015, with forecast production in 2015 reaching 9.2 million bbl/d. Beyond 2015, EIA's Annual Energy Outlook (AEO) projects further production growth, although its pace and duration remain uncertain. Domestic production plateaus near 9.6 million bbl/d between 2017 and 2020, close to its historical high of 9.6 million bbl/d in 1970, in the AEO2014 Reference case. In the AEO2014 High Oil and Gas Resource case, growth continues through the 2020s and into the 2030s, with production reaching 13.3 million barrels per day in 2036.

Recent and forecast increases in domestic crude production have sparked discussion on the topic of how rising crude oil volumes will be absorbed. In early 2013, several commentators had suggested that near-term production growth would be threatened unless restrictions on U.S. exports of crude oil were significantly relaxed. EIA's perspective at the time was somewhat more nuanced, recognizing that relaxation of export restrictions was only one among several ways to absorb growing near-term flows of domestic production. (This Week In Petroleum, Absorbing Increases in U.S. Crude Oil Production, May 1, 2013)

Given the likelihood of continued growth in domestic crude production, and the recognition that some absorption options, such as like-for-like replacement of import streams, are inherently limited, the question of how a relaxation in current limitations on crude exports might affect domestic and international markets for both crude and products continues to hold great interest for policymakers, industry, and the public. In response to multiple requests, EIA is developing analyses that shed light on this question.

This paper provides a short-term forecast of domestic production by crude type, supplementing the overall production forecast provided in STEO. Forecasts of production by crude type matter for several reasons. First, U.S. crude streams vary widely in quality. Second, the economics surrounding various options for the domestic use of additional domestic oil production are directly dependent on crude quality characteristics. Third, actual or potential export values also vary significantly with quality characteristics.

The production forecast analysis of crude oil characteristics provided in this paper provides a starting point for further analyses of the market outlook and the effects of a possible relaxation of existing restrictions on crude oil exports.


Table 1. Crude oil types considered in this analysis


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