March 5, 2018
The next wave of North American oil production is being undercut by lack of pipeline capacity, the International Energy Agency said Monday, but its new report sees “no peak demand in sight.”
And while opposition and red tape continue to hamper the pipelines needed for increase future crude pumping, there will be more need for rail transportation capacity, which could supply up to 900,000-bpd spare export production.
“Crude by rail exports are likely to enjoy a renaissance, growing from their current 150,000 bpd to an implied 250,000 bpd on average in 2018 and to 390,000 bpd in 2019,” the IEA said.
“During 2018-19, West Texas and West Canada are likely to face shortages in midstream capacity brought about by a rapid production increase.”
The IEA outlook depends on a robust world economy and continued cooperation between OPEC and other nations to coordinate supplies and production, and is predicated on severe legal challenges in construction of new Canadian pipelines.
“The situation will be much more severe in Canada than West Texas as legal delays mean capacity is unlikely to increase before the end of 2019.”
“While there is no peak oil demand in sight, the pace of growth will slow down to 1 million bpd by 2023 after expanding by 1.4 million bpd in 2018.”
It is possible that growth in demand for petroleum is being underestimated.
And the IEA report echoed earlier reports from other sources calling for increased upstream investment.
“Natural production declines are slowing, but more investment will be needed. Each year the world needs to replace 3 million bpd of supply lost from mature fields while also meeting robust demand growth. That is the equivalent of replacing one North Sea each year,” according to the IEA.
“Each year the world needs to replace 3 million bpd of supply lost from mature fields while also meeting robust demand growth. That is the equivalent of replacing one North Sea each year.”