US is the new Middle East for NGLs, oil – analyst

14 September 2012 16:44  [Source: ICIS news]

BOSTON, Massachusetts (ICIS)--The US is the new Middle East when it comes to hydrocarbon liquids production and will become the world leader in 12 months, an analyst said on Friday.

“The tectonic shift in the global crude oil trade is moving from east to west. The US is the King Kong of energy and will be the largest producer of crude oil and natural gas liquids [NGLs] in 12 months,” said Brian Habacivch, senior vice president at US-based energy consultancy Fellon-McCord.

He spoke at the 5th annual ICIS World Chemical Purchasing Summit.

In 2011, the US became a net exporter of petroleum products for the first time since 1949. Its net export position will be sustainable for many years, Habacivch said.

The analyst expects US crude oil and liquid fuels production to rise from 10.1m bbl/day in 2011 to 12.4m bbl/day in 2015 and 16.1m bbl/day by 2020.

“We’re going to have a lot more oil in the US and North America through 2020 – a lot more,” Habacivch said.

“Oil production in the Bakken Shale in North Dakota has more than quadrupled in the past five years and is up 75% in just the past 12 months. In a year and a half, it will be as large a producer as Libya,” he added.

Other major shale oil and gas plays are the Eagle Ford in Texas and the Utica in Ohio.

The rising production of natural gas is leading to the re-industrialisation of the US, driven by lower power prices, the analyst said.

“The price of power has dropped from $120/megawatt hour to $45 in 48 months. That is a huge competitive advantage to US manufacturing,” Habacivch said.

Natural gas prices are highly correlated with power prices in the US, as marginal power production in the country is based on natural gas rather than coal or nuclear.

“When you need to increase power production quickly, only a natural-gas-fired turbine can get that done,” Habacivch said.

“The natural gas price is the price of power,” he added.

By: Joseph Chang
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