Enterprise Products Partners, the pipeline operator, expects higher global demand for crude oil and natural gas from the United States this year and higher output from the Permian, Reuters has reported.
The optimistic expectations come despite signals from the oil industry itself that production growth is not among this year's priorities. They also come despite Enterprises' latest figures, which showed a decline in oil flows during the last quarter.
The Energy Information Administration, in its most recent Short-Term Energy Outlook, projected that the United States would produce 12.4 million bpd this year and 12.81 million barrels of crude oil per day by 2024-with both years breaking the annual record average of 12.3 million bpd reached in 2019.
The EIA's projections see output from the Permian increasing by 470,000 bpd to a record 5.7 million bpd this year-a figure that has been questioned by some industry analysts and by the industry itself. Oil companies active in the shale patch have cited high costs as one reason for not making ambitious output growth plans and shareholder returns as another.
In line with this agenda, oil producers are not making big spending plans for this year. The latest Dallas Fed oil industry survey showed that only a quarter of respondents had plans for substantial spending increases this year, versus 39 percent that said they would increase spending moderately.
Some in the industry actually expect a decline in Permian production, meanwhile. Pioneer Natural Resources' chief executive Scott Sheffield said at the end of December that production growth in the shale patch this year would be even more modest than it was last year, at just 300,000-400,000 bpd, noting that drillers were running out of their high-quality acreage and "Less quality production is coming out of the Permian, out of the Bakken," he said.
Enterprise Product Partners, however, has plans to build an oil export terminal and argues that there is demand for such a facility because the pipelines that lead to the biggest oil export conduit for U.S. oil, Corpus Christi, are running at capacity.
By Charles Kennedy for Oilprice.com
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