North America will become the fastest growing oil-producing region outside OPEC during the next five years, with output estimated to jump 11 percent, according to the International Energy Agency.
The region is likely to see output climb 1.5 million barrels a day to 15.6 million by 2016 mostly because of increased output from Canadian oil sands and U.S. onshore shale formations, the Paris-based adviser to oil-consuming nations said today in its Medium-Term Oil and Gas Markets report.
Exxon Mobil Corp.’s Canadian unit is investing C$10 billion ($10.2 billion) on the Kearl oil sands project in Canada, and companies including EOG Resources Inc., Chesapeake Energy Corp. and SandRidge Energy Inc. have committed about $1 billion each in the past two years to produce oil from U.S. geological formations such as the Bakken Shale in North Dakota.
“North America is now seen as the strongest-growing non-OPEC region,” the report said, citing “upward revisions to U.S. onshore crude from tight oil formations” and higher projections from Canadian natural gas liquids and oil sands.
Total production from Canada was forecast to rise by 1.3 million barrels a day to 4.7 million.
In the IEA’s last medium-term outlook in December, the largest downward revision to production outside the Organization of Petroleum Exporting Countries came from the Canadian oil sands. The Dec. 10 report cut almost 400,000 barrels a day from previously forecast output saying “a degree of slippage is evident.” Today’s report says projections “are seen higher.”
The IEA also said U.S. production is forecast to grow a “healthy” 500,000 barrels a day to 8.3 million barrels a day by 2016. U.S. production of “light tight” oil, also known as shale oil, is likely to grow by 1 million barrels a day to 1.36 million by 2016 from estimated output of 370,000 barrels a day in 2010, the report said.
U.S. shale formations such as the Bakken, Eagle Ford in Texas and Marcellus in Pennsylvania require a mix of horizontal drilling and hydraulic fracturing to produce oil and natural gas from dense rock formations.
Rising output from shale formations may trim U.S. imports of low-sulfur crude oil by 500,000 barrels a day within five years as new pipelines carry the oil to refineries along the Gulf of Mexico, according to a study released yesterday by analysts at Purvin & Gertz Inc.
Shale production should rise to about 900,000 barrels a day by 2015 and to more than 1.3 million barrels a day by 2020, displacing imports, Geoff Houlton, a vice president at the Houston-based energy company, said yesterday in an interview.
The IEA also said Mexican production would be slightly higher than previously forecast, though it’s still estimated to decline by 400,000 barrels a day to 2.6 million by 2016 because “Mexico so far lacks substantial new projects in the pipeline to boost production.”