In its recently released five-year Global Crude Oil Outlook, ESAI Energy projects healthy non-OPEC supply growth to 2023. Three trends underscore the expectation that non-OPEC crude and condensate supply will increase by an average of 1 million b/d per annum from 2019 through 2023.
- Infrastructure catching up with US shale growth;
- Streamlined, cost-effective offshore projects from the Gulf of Mexico, Latin America, and the North Sea brought to production;
- Russia moving to a “coordinated” growth strategy
Still, U.S. Shale remains the obvious key driver. Drilling time has decreased, and initial production rates have gone up with longer laterals and “super-fracs”. Moreover, in the past year, many shale producers have brought down debt and increased shareholder returns. Higher prices increased cash flow, and living within their means paid-off, shown by improved bottom lines on quarterly financial reports. Permian production has benefited, held back only by infrastructure.
“There is a misperception that a supply crunch is imminent,” points out ESAI Energy’s, Sarah Emerson. “In a five-year horizon, the potential for non-OPEC supply growth is impressive. This will have a bearing on the degree to which OPEC will have to dip into spare capacity to offset disruptions.”