Oil Production Gains Expected in the Americas

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

Summary

Latin America stands out in terms of oil production growth in terms of percentage, according to OPEC in its monthly report for November. For Brazil, that means more work in offshore pre-salt. In the U.S, it's shale that continues to take the spotlight.

OPEC Sees Growth in U.S., Brazil

It's the Americas that are doing the heavy lifting in terms of oil and gas production, with the United States and Latin America leading the way, economists at the Organization of the Petroleum Exporting Countries (OPEC) found in their monthly report for November.

It's Latin America that leads the way in terms of expected year-over-year gains in total liquids production, with 4.3% growth expected by the economists at OPEC. That compares to 0.13% growth from the United States, though the U.S. remains the world leader in both crude oil and natural gas production.

Brazil's Santos Basin a Standout

In Brazil, OPEC is expecting gains from new fields, with offshore supported by ramp-ups in the Santos Basin. Brazil's government is expecting oil production to increase 30% from year-ago levels this year, driven by new production from the pre-salt fields in the Santos Basin such as Buzios. Much of Brazil's offshore reserves are trapped beneath a thick layer of sub-marine salt.

According to Industrial Info Resources data, there are 15 oil production projects associated with the development of the Buzios field, all of which are backed by investments topping US$13 billion. The Global Market Intelligence (GMI) Oil & Gas Production Project Database offers a list of detailed project reports. Led by Petroleo Brasileiro, better known as Petrobras, data show a drilling program slated for next year could include a half-dozen new production wells tied to an existing floating production storage and offloading unit.

U.S. Shale Oil Expanding

In the United States, much of the oil and gas investments are steered toward various developments supporting liquefied natural gas (LNG). In terms of production, its BP that leads the way with its Kaskida development in the Gulf of Mexico in terms of investment value. Kaskida could be online before the end of the decade. The field would be developed by a floating production unit with a processing capacity of 80,000 barrels per day (bpd) of oil and 25 million cubic feet of gas.

U.S. federal data, however, show offshore crude oil production is set to decline from an average of 2.02 million bpd this year to 1.92 million bpd in 2027. Onshore production, meanwhile, is on pace to increase 4.1% annually to average 11.87 million bpd next year.

Onshore, Industrial Info finds Ovintiv is behind a Permian project backed by $385 million in total investment value. In the Permian, Ovintiv had more than 50 new wells planned for the basin this year. Federal U.S. data, meanwhile, show Permian crude oil production is on pace to increase 4% annually to average 7.14 million bpd next year, while gas production jumps 8% annually.

Does the Supply-Side Squeeze Continue?

OPEC said that annual production to 2027 from producers outside its umbrella is expected to grow by around 600,000 bpd, while global demand is expected to average 2.6 million bpd, suggesting a looming supply-side crunch.

The forecast from OPEC pegged global economic growth at 3.2% annually in 2027. Apart from production, OPEC economies said global inventories are at a premium, peaking at 8.6 million barrels in February.

"Since then, they have fallen on the back of supply disruptions impacting global oil markets," OPEC economists wrote.

Conflict in the Middle East is limiting waterborne trade in commodities. On Tuesday, a British maritime risk agency reported that a fire broke out in the engine room of a tanker off the coast of the United Arab Emirates after it was struck by an unknown projectile.

Key Takeaways

• The supply-side squeeze for global oil could continue to next year.
• Apart from production trends, OPEC is worried about global inventories.

 By the Numbers

• 4.3%: Growth in production expected from Latin America.
• 0.13%: Growth seen from U.S. reserves.

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).