Eric Peterson, Director of Market Research and Analytics, evaluates North American production and future midstream flows to the U.S. Gulf Coast at the Argus Crude & Refined Products Exports conference in Houston, TX.
Summary:
• Over the past 12 months, active U.S. rig count has more than doubled from May 2016 lows
• At current rig count, North American crude oil production will grow an incremental 2MM by 2019
• The Gulf Coast (PADD 3) is the destination for incremental Canadian heavy production growth
• PADD 3 has more than doubled consumption of Canadian crude from January 2014 to January 2017, and is expected to continue to grow
• Currently 266,000 bpd of Canadian crude supply flows through PADDs 2 and 4 into PADD 3 for processing
• With the opening of the Dakota Access Pipeline, Bakken production flows via crude-by-rail, and pipeline volumes running through Cushing and via Mainline will be impacted
• Pipeline construction timing is critical, as Permian basin production could exceed currently available pipeline takeaway capacity over the next 12 months
• By 2019, with increasing domestic production and midstream developments, the Gulf Coast will have 1.85MMbpd of new production headed its way