Douglas Westwood: Shale is no Threat to Deepwater

Marinelink.com
Monday, January 06, 2014

Prodigious US shale oil production is often treated as a threat to deepwater.

 

Won’t all this oil swamp demand? Many investment banks and government agencies forecasting oil markets feel that it could. The evidence, however, suggests differently. We have contended that the world is short of oil, and this shortage, rather than changes in habits or demographics, is driving decreasing oil consumption in the advanced countries. If the oil supply increases, then any overhang will be quickly absorbed. And that’s what the record shows: US product supplied (effectively, US oil demand) reached 20 mbpd in the last four weeks, up a whopping 1 mbpd (5.3%) from the same period last year.  High oil prices have been aggressively suppressing demand in the advanced economies (and, to be fair, in the emerging economies as well). But if prices drop—as gasoline prices did in the US through much of November—demand comes roaring back to life.
 
But will it be enough to offset supply growth? Consider: US shales posted a blow-out year to November 2013, rising by 1.3 mbpd (three month average). The Canadians added nearly another 0.7 mbpd, according to the EIA, for North American production growth of an astounding 1.9 mbpd. And Brent oil prices have recently increased by a few dollars to $111 / barrel.  In the coming twelve months, substantial production growth is expected. Part of this is fuelled by continued North American unconventionals growth of 1.3 mbpd.  
 
Should we worry? There may be soft patches in the year ahead, but expect any excess supply to rapidly find a home, with prices returning to recent levels in a few months. Shales are no threat to deepwater.
 
Analysis provided by Steven Kopits, Douglas-Westwood, New York

 

Maritime Reporter October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Cost to Fuel Ships Falls

For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as $1 million a year if current price level stay put. Assuming

Asia Tanker, VLCC Rates Could Climb

Charterers to release 30 Middle East VLCC cargoes next week. VLCC market buoyed by upbeat Suezmax, Aframax sectors. Rates for very large crude carriers (VLCCs)

Belgian Strike to Impact Antwerp Port

A strike in parts of Belgium on Monday is expected to disrupt rail services and one of Europe's largest ports as trade unions and workers voice their anger over

Energy

Venezuela Ships First Crude Mixed with Algerian Oil to China

Venezuela is sending its first shipment of crude mixed with Algerian light oil to China, according to state oil company PDVSA and traders.   Venezuela recently

Update: Explosion in the Gulf of Mexico

An explosion occurred aboard a production platform Thursday at West Delta 105, operated by Fieldwood Energy, resulting in one fatality and three injured. The Bureau

New Tidal Wave Energy Device Completes Sea Trials

In the continuing quest to harvest efficient, renewable energy from the power of the world’s tides, an organization called Sustainable Marine Energy’s announced

Offshore Energy

Update: Explosion in the Gulf of Mexico

An explosion occurred aboard a production platform Thursday at West Delta 105, operated by Fieldwood Energy, resulting in one fatality and three injured. The Bureau

Deepwater Semi-Sub COSL Prospector Delivered

COSLProspector, the fourth deep-water semi-submersible drilling rig built by CIMC Raffles for China Oilfield Services Limited (COSL), has been delivered in Yantai, Shandong Province.

New Tidal Wave Energy Device Completes Sea Trials

In the continuing quest to harvest efficient, renewable energy from the power of the world’s tides, an organization called Sustainable Marine Energy’s announced

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Offshore Oil Pod Propulsion Ship Electronics Ship Repair Ship Simulators Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1254 sec (8 req/sec)