Alrightee, there have been a number of key reports from the EIA this week which have prompted me to present some pertinent points, and pose some ponderations. So below is the skinny from three reports on shale, gales (well, hurricanes), and tipping scales (…of market balance).
First up is a report which is an updated assessment of global shale oil and natural gas resources. The report is chock full of info, but here are some of the key takeaways:
–Globally 32% of total estimated natural gas resources are in shale formations (7,299 Tcf of a total of 22,822 Tcf)
–Globally 10% of total estimated oil resources are in shale / tight formations
–Technically recoverable US dry shale gas resources are estimated at 637 Tcf, compared to a total US estimate of 2,335 Tcf
–US shale gas accounted for 40% of production last year (9.6 Tcf)
–Here are the top 10 countries with the largest technically recoverable shale gas and oil resources:
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–Shale gas assessments are not necessarily in an upward spiral. Both Norway and Poland saw significant downward revisions, while even China – the leading country for shale gas resources – saw its estimate reduced from 1,275 Tcf to 1,115 Tcf
–Tight shale oil resources provided for 29% of total US crude oil production last year, making up the majority of the year on year increase of 847,000 barrels a day
–Note: this report covered 41 countries and 137 shale formations, but estimates for the Middle East were not included
Next up is a supplement released with the monthly Short Term Energy Outlook, which takes a look at the historical impact of the Atlantic hurricane season on natural gas and oil production, as well as the season ahead:
–The report points to a 58% probability of more natural gas and oil being shut in this year compared to last
–Last year saw 14.3 million barrels shut-in in total, and 32.1 Bcf of natural gas
–The mean expectation for this year is shut-ins of 19.3 million barrels of oil, and 46.4 Bcf of natural gas
–In 1997, 26% of total natural gas production came from the Gulf of Mexico, in 2012 that number was…6%
–In similar fashion, the Gulf of Mexico share of total oil production has declined from 26% back in 2011 to 19% last year
–The top five storms to have the largest cumulative impact on Gulf of Mexico oil and natural gas production were (in descending order) Rita, Gustav, Ivan, Katrina, and Ike.
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The third and final release to be referenced here is the Short Term Energy Outlook, which provides a monthly update on domestic and global supply and demand. While the report itself produced nothing too shocking versus the prior month, the chart below seemed rather pertinent given the recent Opec meeting and the attention given to rising non-Opec oil production, and particularly in the US.
This chart serves to highlight a potential tipping point in the scales of the supply balance between Opec and Non-Opec. Rising US production is expected to continue, leaving Opec not only to adjust to more non-Opec supply hitting the market, but also to less demand for its own crude.
So that concludes a busy week of releases from the EIA, I hope this summary was of use. ‘Til next week...rock on!
By. Matt Smith