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PIRA's newly released study titled "Shale Crude’s Growing Global Impact" focuses on implications of North America’s shale revolution both within and beyond its borders.
PIRA’s 2012 study The Road to U.S. Energy Independence addressed the implications for North American pricing, crude and product flows, refining operations, and energy policy that were likely to arise from growing North American shale crude/condensate production. "Shale Crude’s Growing Impact" updates those conclusions and addresses the worldwide impact of the revolution with a focus on the consequences of falling U.S. crude import requirements, the redirection of crude trade to Asia, and the consequences for regional crude pricing and shipping. We also examine the implications of growing North American product exports and the impact this will have on refined product output, trade, and pricing in both Asia-Pacific and the Atlantic Basin.
Crude’s Growing Global Impact: Consequences Within and Beyond North America’s
Borders" answers the following
· How will crude oil
trade flows evolve? How will exports be redirected from Africa? Latin America?
Middle East? What will this mean for global crude pricing relationships? For
light crudes? Heavy? How will these conclusions change if Canada is unable to
export? If U.S. policy changes permit crude exports or swaps? If Middle East
producers price crude to maintain market share in the U.S.?
· What will determine
the volume of U.S. product exports? Where are the most likely markets for these
exports and what will constrain market size? What impact will this have on refining
economics and operations elsewhere in the Atlantic Basin? Export refineries in the Middle East and
India? What will be the impact on
· How will this impact global
crude and product trade volumes? What
are the implications for ton-mile requirements for crude and product waterborne
movements and the tankers required to meet these requirements?
was the case in PIRA’s earlier North American shale study, the answers to these
questions are neither simple nor straightforward since they involve the
interaction between geological, economic, political, technological and regulatory
factors. PIRA's experience and expertise in all of these areas — along with our
ongoing detailed analysis of oil supply/demand balances, refinery databases and
petroleum flow models, and our recently developed North American transport
models — make us uniquely qualified to carry out these assessments.
Companies purchasing the study are entitled to have three users to each of the following deliverables (licensing options are available to add extra users):
Over the course of a day, attendees had the opportunity to see a presentation of the key results, discuss those findings and their implications, and question the study’s authors. The forum presentations with recorded audio accompaniment are available to study users.
The 180-page written report explains the findings of the study and outlines the bases underlying those results, while providing a discussion of the key uncertainties that impact the major conclusions. The report also includes an executive summary.
A comprehensive database providing historical data generally back through 1995 and forecasts through 2030 in Excel spreadsheets for:
The substantial and growing volumes of shale crude/condensate that have come to market in North America have already drastically altered North American balances across the supply chain, from production through refining through crude and product trade and transport. U.S. crude imports have already fallen by 25% from their peak and net U.S. product exports turned positive in 2011 and continue to expand. Overall U.S. oil import dependency has fallen from a high of 60% as recently as 2006 to under 33% today. For the U.S. and Canada together, net oil imports will decline and the region will flip to net exporter status around 2020.
As both the crude and oil product markets are global in nature, the impacts of the North American shale revolution do not stop at the U.S.’s or Canada’s borders. They have a far-reaching significance. For example:
Decisions by producers, refiners, oil-producing and oil-consuming governments, vehicle manufacturers, energy end-users and others have been made over the past decades under the presumption that higher prices and growing OPEC production (involving a heavier crude mix) would drive pricing relationships, policy decisions, and the overall role of oil relative to other fuels. A re-examination is now required. Shale Crude’s Growing Global Impact: Consequences Within and Beyond North America’s Borders will help market participants understand how supply, demand, trade, and policy actions will all change and interact in the global crude oil market. The following market participants can all benefit from this study:
Global crude-producing companies will gain a better understanding of the evolving factors that will determine the pricing for their crudes, new competition, and likely markets as traditional net import requirements evolve. The governments of oil-producing countries will similarly benefit from this perspective on the likely growth in export revenue.
North American crude producers need to understand the potential for downside vulnerability to crude prices in order to best position themselves for such an event. State and provincial governments depending on oil revenues will similarly benefit from the results.
Refiners need to plan capacity changes based on the outlook for demand, feedstock supply, and relative pricing. The paradigm of deep conversion of inexpensive heavy sour crudes will be challenged by a surplus of attractively priced light sweet crude. The potential for growth in product exports from North America and the potential limits to that market could prove to be a critical issue to downstream success.
Trading companies want to anticipate regional supply/demand changes and price dynamics as crude trade evolves. This study’s analysis will aid in planning terminal and shipping infrastructure needs to best capture future opportunities.
Shipping companies will need to address these changes as U.S. crude imports decline but movements from the Atlantic Basin to Asia increase. Product trade also will change, generally growing faster than crude trade.
Railroads and pipelines will also have a vital interest in the volumetric outlook for domestic vs. imported crude.
Policy-makers around the world will need to determine whether the current policy mix is appropriate given the likely changes in their country’s supply/demand balances. Will actions to promote shale/tight crude/condensate production prove to be a more cost effective alternative vs. other policies to reduce import dependence?
Financial institutions must make sound evaluations of how changing market conditions will affect the economics and financing of new refining, upstream oil, and energy infrastructure investments. This study will allow for more informed decision-making on potential projects.
"Shale Crude’s Growing Global Impact: Consequences Within and Beyond North America’s Borders" can be purchased by both PIRA retainer clients as well as non-clients. Existing PIRA retainer clients receive a reduced price.
The standard fee allows for three users to the study (and three invitations to the Forum); extra report copies, database passwords and Forum invitations can also be purchased. Contact firstname.lastname@example.org for detailed pricing information.