Last updateFri, 11 Oct 2019 2pm

U.S. Leads Petroleum, Natural Gas Production with Record Growth

U.S. petroleum and natural gas production increased by 16% and by 12%, respectively, in 2018, and these totals combined established a new production record. The U.S. surpassed Russia in 2011 to become the world's largest producer of natural gas and surpassed Saudi Arabia in 2018 to become the world's largest producer of petroleum. According to the U.S. Energy Information Administration (EIA), last year’s increase in the U.S. was one of the largest absolute petroleum and natural gas production increases from a single country in history.

For the U.S. and Russia, petroleum and natural gas production is almost evenly split; Saudi Arabia's production heavily favors petroleum. Petroleum production is composed of several types of liquid fuels, including crude oil and lease condensate, natural gas plant liquids (NGPLs), and bitumen. The U.S. produced 28.7 quadrillion British thermal units (quads) of petroleum in 2018, which was composed of 80% crude oil and condensate and 20% NGPLs.

Global Chemicals Output Ends Quarter on Strong Note

Data collected and tabulated by the American Chemistry Council (ACC) show that global chemicals production ended second quarter of 2019 on a solid note, increasing by 0.8% in June following a 0.7% gain in May. Headline global production was up an improved 2.5% year-over-year on a three-month moving average basis and stood at 118.9% of its average 2012 levels.

Among chemical industry segments, June results were positive across the board. Considering year-earlier comparisons, growth was strongest in manufactured fibers followed by bulk petrochemicals and organics, synthetic rubber, coatings, and other specialties.

Unpredictability Highlights Global Petrochemical Outlook

The global petrochemical industry is heading into the second half of 2019 caught in a whirlwind of volatile crude oil prices, ongoing trade disputes and geopolitical tensions. According to S&P Global Platts, international upheaval has shaped trade flows and price movements in the first half of the year alongside another major trend – the rise of new petrochemical plants as additions to upstream refineries in China.

U.S. trade disputes with China and Mexico have upset global supply, with tariffs and counter-tariffs forcing producers of various petrochemicals to look for new markets and possibly disrupt long-established supply chains if traditional routes are closed or too costly.

U.S. Refinery Runs to Decline for First Time in 10 Years

U.S. gross inputs to refineries, also known as refinery runs, have increased each year since 2009, most recently reaching a record high of 17.3M barrels per day (b/d) in 2018. However, based on its monthly refinery run data through May and forecast for the remainder of 2019, the U.S. Energy Information Administration (EIA) expects refinery runs to decline and average 17.0M b/d in 2019.

U.S. refinery capacity was at a record high of 18.8M barrels per calendar day as of January 1, 2019. EIA’s annual Refinery Capacity Report shows that U.S. refining capacity will not expand significantly during 2019. EIA surveys refinery capacity annually, so any changes to refinery capacities during a calendar year will not be captured until the next survey at the beginning of the next calendar year.

Natural Gas Deliveries to LNG Export Facilities Set Record

Natural gas deliveries to U.S. facilities producing liquefied natural gas (LNG) for export set a monthly record in July 2019, averaging 6.0B cubic feet per day (cf/d)—7% of the total U.S. dry natural gas production—according to data from OPIS PointLogic Energy. In the first seven months of 2019, natural gas feedstock deliveries to LNG export facilities have been the fastest growing among all U.S. natural gas consumption sectors.

The U.S. Energy Information Administration estimates that U.S. LNG exports set new records in June and July 2019 at 4.8B cf/d and 5.2B cf/d, respectively, based on tanker loadings data from Bloomberg L.P. Natural gas feedstock deliveries to LNG export terminals averaged 5.5B cf/d in June and 6.0B cf/d in July, implying that about 15% of the natural gas feedstock sent to LNG facilities was used as fuel in the liquefaction process.

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