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Chapter 3 Oil supply In the overview of the Reference Case in Chapter 1, it was shown that non-OPEC liquids supply is expected to continue to rise over the projection period, due mainly to the rise in supply from non-crudes. This Chapter looks in more detail at these expectations. The first two sections examine the prospects for non-OPEC crude and NGLs, over both the medium- and long-terms. The third and fourth sections then present projections for non-conventional oil and biofuels. Medium-term non-OPEC crude and NGLs The oil industry’s reaction to the precipitous fall in oil prices in the second half of 2008 was rapid. Both upstream and downstream spending fell swiftly in 2009. However, the recovery in prices since then has restored investor confidence, and upstream capital expenditures in 2010 returned close to 2008 levels. The medium-term Reference Case oil supply projections are developed using a large database of upstream projects. The expected supply projections combine incremental volumes from new fields with observed declines in existing fields. Total non-OPEC crude oil and NGLs supply rises slowly over the mediumterm, from 46.3 mb/d in 2010, to 46.8 mb/d in 2015 (Table 3.1). The 1.3 mb/d fall in OECD supply over this period, mainly from the US and the North Sea, is more than compensated by increases in Latin America, mainly Brazil, and the Caspian region, primarily Kazakhstan. By 2012, developing countries already supply as much crude and NGLs as the OECD. Russian production, currently accounting for 22% of the non-OPEC total for crude and NGLs, is expected to remain constant at just over 10 mb/d throughout the medium-term, assuming that fiscal constraints such as export taxes are not eased. US crude oil and NGLs production in the medium-term is projected to stay steady at close to 7.5 mb/d. This is almost 0.5 mb/d higher than WOO 2010 projections, which were impacted by the high uncertainties associated with the aftermath of the Deepwater Horizon accident in the Gulf of Mexico. This level is expected to be maintained for a number of years as new projects come on stream, including both existing and new ultra deepwater fields, such as Cascade & Chinook, Galapagos, Thunder Bird, Jack & St. Malo, Knotty Head, Puma, Big Foot and Mars B. 113 Chapter 3
114 In Canada, although the Outlook envisages an expansion in total liquids supply, due mainly to oil sands and shale oil developments, the country’s conventional crude oil plus NGLs production is projected to start declining in 2012 at an annual rate of around 0.1 mb/d, reaching 1.7 mb/d by 2015. In the Reference Case, the US & Canada’s total crude oil plus NGLs production is set to decline from 9.4 mb/d in 2010, to 9.1 mb/d in 2015. Last year, Mexico managed to slow its production decline. During 2010, production fell by only 20,000 b/d, compared to a 190,000 b/d drop in 2009. However, it is anticipated that Mexican production will continue to decline over the mediumterm. The main reasons for this include the more rapid decline in the giant Cantarell field compared to that expected only a few years ago, a peaking in production from Ku-Maloob-Zaap complex, and doubts that additional production from Chicontepec will offset declines in other fields. In the Reference Case, Mexico crude oil and NGLs production is set to fall from 3 mb/d in 2010 to 2.6 mb/d in 2015. Crude and NGLs production in Western Europe fell by 350,000 b/d in 2010. As in previous years, this was mainly due to declines in North Sea output. This North Sea production trend is anticipated to persist in the coming years. Western Europe’s crude oil and NGLs production is projected to fall to 3.5 mb/d in 2015, down from just over 4 mb/d in 2010. Breaking down the North Sea figures further, both Norway and the UK see falls of 0.2 mb/d for the period 2010-2015. In Norway, declines in mature fields, limited additional volumes and some government policies continue to increase the medium-term risks for lower output. Projects such as Vigdis NE, Trestakk, Visund South, Hyme, Katla, Goliat, Jardbaer, Bream, Froy, Ekofisk South and Eldfisk II are expected to translate into additional supply over the medium-term, but this is not sufficient to offset declines in mature fields. Norwegian crude and NGLs production fell 220,000 b/d in 2010, to 2.14 mb/d. Over the medium-term, it is expected to decline at a slower annual rate of around 0.05 mb/d, reaching 1.9 mb/d by 2015. In the UK, following a reduction in exploration and appraisal spending and heavy declines in existing fields, crude oil and NGLs production fell by around 120,000 b/d during 2010. This trend, which began around ten years ago, is expected to continue in 2011 and beyond. The recent 10% increase in tax on supplementary corporate profits for the oil and gas industry, from 20% to 30%, is anticipated to reduce investment levels even further. It should be noted, however, that this might be partially offset by a potential increase in tax support for offshore oil and gas companies. Nevertheless, UK crude oil and NGLs production is expected to fall from around 1.4 mb/d in 2010, to 1.2 mb/d in 2015.
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Section One
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Chapter 1 World oil trends: overvie
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Box 1.1 Regulatory reform in the en
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commodities, the OTC market also in
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IHS CERA upstream capital cost MOVE
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in the strength of the dollar: in N
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to this, there is the dominance of
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Although these reduced growth targe
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Global and regional population leve
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average of 67% of the population in
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Table 1.3 Population by urban/rural
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Figure 1.8 Real GDP by region in 20
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Policies The Reference Case retains
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electric vehicles, which focuses on
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Box 1.5 Shale gas: recent developme
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40 years. While the early high perf
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Box 1.6 After Fukushima: unclear fo
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is Japan itself, which has been ask
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Figure 1.13 Fossil fuel use per cap
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Table 1.6 Medium-term Reference Cas
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Section One

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