Shale Oil: US To Emerge Top Oil Producer By 2015 The emergence of shale oil in the United States of America is set to propel it to the No. 1 oil producer in the world by 2015, outpacing Russia and posing a serious threat to the Organisation of Petroleum Exporting Countries (OPEC) members such as Nigeria, according to a new report by the International Energy Association (IEA) published yesterday. In its annual World Energy Outlook reported by Bloomberg, IEA said the United States is close to energy self-sufficiency over the next 20 years as it exploits oil from rocky shale formation, cushioning it against disruptions in Africa and the Middle East. The boom threatens revenues for OPEC’s 12 members whose production is at its lowest in two years amid political unrest in Libya and theft in Nigeria. Speaking in London yesterday, Fatih Birol, IEA’s chief economist, said: “We do not expect this trend will continue after 2020s. It will come to a plateau and decline as a result of the limited resource base of light tight oil. The Middle East, the only large source of low-cost oil, remains at the center of the longer-term outlook.” OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. It will next meet to review production targets on Dec. 4 in Vienna. “The United States moves steadily towards meeting all of its energy needs from domestic resources by 2035,” the Paris-based adviser to 28 energy-consuming nations said today. “But this does not mean that the world is on the cusp of a new era of oil abundance. Light, tight oil shakes the next 10 years, but leaves the longer term unstirred,” the report said. The U.S. will overtake Russia, currently the biggest oil producer, in 2015 as it taps rock and shale layers in North Dakota and Texas with the use of horizontal drilling and hydraulic fracturing, according to the report. The nation’s output will plateau after 2020 and it will lose its top ranking at the beginning of the 2030s, the report said. Crude prices will advance to $128 a barrel by 2035 with a 16 per cent increase in consumption, supporting the development of so-called tight oil in the U.S. and a tripling in output from Brazil, the IEA said in the report. U.S. crude production rose to 7.896 million barrels a day in the week ended Oct. 18, the most since March 1989, according to the Energy Information Administration. Global oil demand will expand by 14 million barrels to average 101 million a day in 2035, according to the IEA report. The share of conventional crude will drop to 65 million barrels by the end of the period because of growth in unconventional supplies, the IEA said without providing current data. The concentration in global oil trade will continue to shift to the Asia-Pacific from the Atlantic Basin, as China is on the verge of becoming the world’s biggest oil importer, the report showed. India will displace China as the biggest driver of energy demand growth after 2020, the IEA said. Expanding refinery capacity in Asia and the Middle East along with reduced demand in many developed nations is intensifying the pressure for plants to close, the agency said. While North American shale, coupled with rising production in Brazil and global supplies of natural gas liquids, will dominate output growth over the next 10 years, OPEC and its Middle Eastern members in particular will regain importance after that as supplies from outside the organization falter, according to the report. OPEC pumps about 40 per cent of global oil supplies. Marginal field operators decry huge crude oil theft • Sector records N15.6bn loss Operators of marginal fields ceded by international oil companies (IOCs) have decried consistent loss of revenue as a direct result of crude oil theft. Apart from lack of access to funds to develop field operations, the operators said vandalism of pipeline assets has also hindered their operations. The operators which consist mainly of indigenous oil companies revealed that challenges in the industry are responsible for inadequate output from eight out of 20 licences awarded in 2003. Speaking on the issue in Lagos, Mr Felix Amieyeofori, managing director, Energia Ltd, an indigenous marginal field crude oil operator, said that over $100 million (about N15.6 billion) was lost by operators to illegal crude oil theft in 2013. Amieyeofor, operator of Energia/Oando joint venture, owners of Obodougwe/Obodeti fields in Delta State, made the disclosure at the 2013 pre-annual conference of the Nigerian Association of Petroleum Explorationists (NAPE). He said that one of the major challenges confronting marginal field operators was crude oil bunkering and pipeline vandalism. According to him, “export-line continuous vandalism has been a major impediment; for every barrel of crude pumped through the lines, about 25 per cent to 30 per cent is lost before it gets to the terminal”. But he stated that operators are working with the Department of Petroleum Resources (DPR) on ways to contain the issue. “If we pump 3,500 barrels of crude oil and about 30 per cent is lost in the process through oil theft, it is a great loss to marginal field operators,” he said. Amieyeofor said that the company lost over $72 million (N11.2 billion) in 2012 to crude oil theft while $100 million (N15.6 billion) was also lost in 2013. He said that the cluster group which comprises Energia Ltd., Midwestern/Suntrust, Platform Petroleum and Frontier Company with production capacity of about 8,000 barrels of crude oil per day would soon increase its production capacity to about 45,000 barrels in 2014 when additional wells are added. He said that the additional fields are located in the “marginal field cluster” in Nigeria’s volatile Delta State. Amieyeofor also complained that access to funding, community issues and security and low productivity, among others, posed serious challenge to all marginal field operators. Also, Mrs Iju Ifejika, chairperson, Brittania-U Nig. Ltd., owners of Ajapa field, located offshore Delta State, said that only eight of the 28 marginal fields awarded in 2003 are functional. Ifejika said that seed funds for development has been an obstacle to marginal operation in Nigeria, pointing out that Ajape field with production capacity of 250,000 barrels per day and 2.2 million standard cubic feet of gas per day would soon add two additional marginal wells. She said that there was need for marginal field operators to put in place emergency rescue system to avert accidents. “We plan to be more active in the sub-Sahara regional oil and gas investment. We are currently training our workers on health, safety and environmental protections,’’ she said. Mrs Adedoja Ojelabi, president-elect and chairman, NAPE 2013 Planning Committee, said that the theme of the 31st annual conference and exhibition --“Stimulating Exploration and Reserves Growth in a Maturing Basin’’ -- was to challenge operators. Ojelabi said that the Nigerian Exploration and Production industry was witnessing reduced exploration activities and investment, while other African countries are celebrating exploration successes.
Posted on: Wed, 13 Nov 2013 07:44:51 +0000