Velda Addison, Hart Energy
The U.S. Energy Information Administration (EIA) has released a report showing the U.S. produced more than four times the amount of oil as Iraq, the world’s second-leading oil supply growth contributor, in 2014, as the production standoff continued, fueling a worldwide oversupply.
The nearly 1.6 MMbbl/d of production growth in the U.S. would have been unimaginable 10 years ago. But advancing technologies, led by the combination of horizontal drilling and multistage horizontal fracturing, have unlocked unconventional shale plays. Meanwhile, the energy sector in Iraq—a country perhaps known as much for its oil as its political turmoil—has not collapsed under attacks and the potential for more in parts of the country. Instead, production surged, averaging nearly 3.4 MMbbl/d in 2014.
“Iraq's crude oil production fell to its lowest monthly levels for the year during July and August following the start of the ISIL [Islamic State of Iraq and the Levant] offensive. From August to December, Iraq's production grew by almost 600,000 bbl/d, reflecting increased output from fields in southern Iraq and in the Iraqi Kurdistan region following infrastructure expansions and a partial recovery in northern Kirkuk production. In December, Iraq's crude oil production reached 3.75 million bbl/d, the highest amount on record,” the EIA said.
“In December, Iraq's central government and the KRG [Kurdistan regional government] reached a deal on oil exports and revenues, which could facilitate significant increases in production and exports from northern fields. Notwithstanding this agreement, the threat of ISIL on northern production and exports is still present. Barring any major supply disruption, EIA expects that Iraq will continue to be the largest source of production growth within OPEC over the next two years.”
Iraq’s figures place the country as OPEC’s second largest producer, behind Saudi Arabia and ahead of other OPEC members including Iran, the United Arab Emirates and Kuwait.
But the world’s oil supply glut and lower demand, which has forced down oil prices, has brought more news of casualties—thousands upon thousands of job losses in the oil and gas sector, idled rigs and slashed budgets.
The cutbacks could slow output growth and prompt a price rebound, signaling a turnaround for the industry.
Just this week OPEC lowered its oil-supply growth forecast for non-OPEC nations, led by the U.S. with a 130 Mbbl/d decrease. Bloomberg reported that the estimated non-OPEC supply growth for 2015 was reduced by 420 Mbbl/d to 850 Mbbl/d a day. However, non-OPEC supply is still forecast to grow to more than 57 MMbbl/d.
That may not be such a bad thing, considering global oil demand is forecast to inch up slightly—1.3% to just more than 92 MMbbl/d in 2015 with production from OPEC members already sliding in January, ironically, because of losses in Iraq. Sources cited by the report, according to Bloomberg, said OPEC production fell by 53 Mbbl/d to just more than 30 MMbbl/d in January.
Contact the author, Velda Addison, at firstname.lastname@example.org.
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