As US oil production increases the need for midstream infrastructure, storage operators are maximising opportunities to capitalise on these favourable market dynamics, especially as Mexico’s liberalised energy market creates more attractive opportunities. Paul Wiseman reports
For the oil and gas midstream sector, the last 12 months have seen strong growth. Slowly rising commodity prices boosted largely by reduced supply resulting from OPEC production cuts have been the primary factor. Even as OPEC generally sticks to its goals of oil production cuts, non-OPEC nations, led by the US, have used the resulting higher prices to increase their own production.
The International Energy Agency (IEA), in a publication dated 13 February 2018, says non-OPEC production increases were led by the US – by a wide margin. ‘In just three months to November, crude output increased by a colossal 846 kb/d, and will soon overtake that of Saudi Arabia. By the end of this year, it might also overtake Russia to become the global leader. All the indicators that suggest continued fast growth in the US are in perfect alignment; rising prices leading, after a few months, to more drilling, more completions, more production, and more hedging,’ it says.
As far as total hydrocarbon production, the US Energy Information Administration (EIA) estimates that the US has already surpassed Russia, as long ago as 2012. The US became the world’s number one producer of natural gas
As global oil demand grew in 2017 by 1.6 mb/d, oil prices continue a slow rise. As of early May, West Texas Intermediate prices hit $70/b for the first time since 2014. As of 18 April, the EIA tracked US petrol prices at 2.757 for regular of all formulations, and $3.096 for diesel of all grades.