Last updateThu, 05 Dec 2019 8pm

Gulf of Mexico Crude Production to Continue to Set Records

U.S. crude oil production in the U.S. Federal Gulf of Mexico averaged 1.8 million barrels per day (b/d) in 2018, setting a new annual record. The U.S. Energy Information Administration (EIA) expects oil production in the Gulf to set new production records in 2019 and in 2020, even after accounting for shut-ins related to Hurricane Barry in July 2019 and including forecasted adjustments for hurricane-related shut-ins for the remainder of 2019 and for 2020.

Based on EIA’s latest Short-Term Energy Outlook’s expected production levels at new and existing fields, annual crude oil production in the Gulf will increase to an average of 1.9 million b/d in 2019 and 2.0 million b/d in 2020. However, even with this level of growth, projected Gulf crude oil production will account for a smaller share of the U.S. total. EIA expects the Gulf to account for 15% of total U.S. crude oil production in 2019 and in 2020, compared with 23% of total U.S. crude oil production in 2011, as onshore production growth continues to outpace offshore production growth.

Is the “Shale Boom” Finally Slowing?

“Since the oil-price bust of 2014, unpredictability has been the theme music of U.S. shale. But through all the down moments -- a wave of bankruptcies and a drop in the number of drilling rigs among them -- production has proven durable. It grew by more than 2 million barrels per day last year, for example,” Bloomberg reports.

“But 2019 has played a different tune. Even with prices holding steady above $52 a barrel, oil output was virtually unchanged at 12 million barrels a day in the first seven months, according to the EIA. In weekly data available since July, production has hovered at about 12.4 million barrels per day.”

U.S. Crude Exports Continued to Grow in First Half

U.S. exports of crude oil rose to average 2.9 million barrels per day (b/d) in the first half of 2019, an increase of 966,000 b/d from the first half of 2018. U.S. crude oil exports also set a record-high monthly average in June 2019 at 3.2 million b/d.

The U.S. is still one of the world’s largest importers of crude oil: in the first half of 2019, U.S. imports of crude oil less exports (net imports) averaged 4.2 million b/d compared with 6.1 million b/d in the first half of 2018. Increases in U.S. domestic crude oil production have resulted in reduced imports and increased exports.

Canada remained the top destination for U.S. crude oil exports, but volumes exported to Canada did not change much between the first halves of 2018 and 2019. By contrast, U.S. crude oil exports to most other major destinations have increased.

Global Chemicals Output Declined in August

Data collected and tabulated by the American Chemistry Council (ACC) show that global chemicals production fell by 0.4% in August, more than offsetting the 0.1% gain in July. During August, chemical production increased in Latin America and Africa and the Middle East. Production fell in other regions. Headline global production was up only 1.6% year-over-year (Y/Y) on a three-month moving average basis and stood at 118.0% of its average 2012 levels.

During August, global capacity rose by 0.2% and was up 3.6% Y/Y. As a result, capacity utilization in the global chemical industry fell 0.5 points to 82.5%. This is down from 84.1% last August and below the long-term (1987-2017) average of 86.4%.

Feds Plan to Enforce Biofuel Mandate

The USDA announced plans to enforce the Renewable Fuels Standard, which would remove restrictions to the sale of higher ethanol blends of gasoline like E15. The EPA will seek comment on actions to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020, and that the volume obligation for biomass-based diesel is met. This will include accounting for relief expected to be provided for small refineries.


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