It Ain’t Heavy, It’s the Bakken – What does the huge shift to light crude production mean for refinery runs, price differentials and margins?
U.S. onshore crude oil production forecasts have skyrocketed in recent months, along with rig counts, current production and any other measure of activity you can think of. The big dogs are Bakken, Eagle Ford and Permian – all of which yield light-sweet crude or even lighter condensates. As outlined here last week in ‘You're doin' fine, Oklahoma’, forecasts for U.S. crude oil production can be classified as high, very high and extremely high. BENTEK is in the very high camp, expecting an increase of 2.2 Bcf/d between 2011 and 2016. Raymond James is poster child for the extremely high crowd, coming in at an incremental 3.5 Bcf/d by 2015. (RJ rounds up to 4.0 Bcf/d in some of their materials.). All of the forecasts have one thing in common. It is all light sweet crude oil. Not that gunky Canadian stuff that has so many protesters in a tizzy. …But clean, sweet smelling U.S. natural crude oil, made from the bodies of dead dinosaurs billions of years ago. (the one on the right)
