American Oil and Gas Reporter - September 2015 - 168

Director for Endangered Species Gary
Frazier to say, "We are disappointed that
they filed another large, multispecies petition."
* Seventy-one plaintiffs have filed
42 lawsuits challenging USFWS decisions
on 107 species. WEG and CBD remain
the most prolific litigants, filing 23 (53

percent) lawsuits involving 45 (42 percent)
of the species.
"The Western Energy Alliance supports
legislation to limit the ability of groups
to 'sue-and-settle' behind closed doors
without the involvement of elected state,
local and federal officials, and to limit
reimbursements under the Equal Access

to Justice Act," Sgamma stated. "The
USFWS rule making on the ESA petition
process to prevent bulk petitions and involve state wildlife agencies is encouraging, as it is a sign that even the agency
has had enough of the ESA's abuse, but
we encourage Congress to codify it along
with other ESA reforms."
❒

EIA Forecasts Less U.S. Oil Production
WASHINGTON-After recording a
100,000 barrel a day drop between June
and July this year, the U.S. Energy Information Administration has lowered its
projection of total 2015 U.S. crude oil
production by 100,000 barrels a day and
is predicting a 700,000 bbl/d decline in
annual output for 2016 in its Short-Term
Energy Outlook (STEO) for August.
The August STEO shows U.S. oil
production increasing from an average
of 8.7 million barrels a day in 2014 to
9.4 MMbbl/d in 2015 and then decreasing
to 9.0 MMbbl/d in 2016, which EIA
notes is 100,000 and 400,000 bbl/d lower
than it projected for 2015 and 2016, respectively, in the July STEO.
EIA estimates U.S. oil production averaged 9.5 MMbbl/d in the first half of
2015, which is 300,000 bbl/d more than
fourth quarter 2014, despite an almost
60 percent decline in the oil-directed rig
count since October.
The August STEO projects U.S. crude
oil production will continue declining
through third quarter 2016, when total
production is forecast to average 8.8
MMbbl/d. "Forecast production begins
rising in late 2016, returning to an average
of 9.1 MMbbl/d in the fourth quarter,"
EIA says, pointing out that 13 projects
are scheduled to come on line in the Gulf
of Mexico this year and next, pushing up
Gulf production from 1.4 MMbbl/d in
fourth quarter 2014 to more than 1.6
MMbbl/d in the same period of 2016.
Worldwide, EIA is projecting a 2.3
MMbbl/d increase in total oil production
this year over last, although that slows to
only a 340,000 bbl/d increase from 2015
to 2016. Outside the United States, the
agency is projecting only about a 200,000
bbl/d increase in production within the
Organization for Economic Cooperation
and Development this year, followed by
a 130,000 bbl/d increase in 2016.
EIA estimates that crude oil production
in the Organization of Petroleum Exporting
Countries averaged 30.1 MMbbl/d in
2014, and forecasts OPEC crude oil production will increase 800,000 bbl/d this
year, then remain relatively flat in 2016.
"Iraq is expected to be the largest con-

tributor to OPEC production growth this
year," the agency states. "In 2016, additional OPEC crude oil supply is expected
to come from Iran.

Iranian Factor
On July 14, EIA notes, the P5+1 countries (five permanent members of the
U.S. Security Council plus Germany)
and Iran announced an agreement that
could result in economic sanctions being
lifted on Iran. For the purposes of its August STEO, EIA says it assumes sanctions
relief occurs in mid-2016. "If sanctions
relief occurs," EIA calculates, "Iranian
crude oil supplies will increase by about
300,000 bbl/d in 2016, with most of the
growth occurring in the second half of
the year.
"While much uncertainty remains as
to the timing of sanctions relief, EIA's
projection assumes that adoption takes
place by the end of October 2015," the
agency adds.
EIA recalls that Iran produced 3.6
MMbbl/d of crude oil in late 2011, before
the recent round of sanctions was enacted.
Iranian production currently averages
about 2.8 MMbbl/d.
Saudi Arabia and other OPEC countries
are not expected to cut production to accommodate additional Iranian volumes,
EIA continues, although some producers
will see production declines in the near
term. "For example," the agency relates,
"Saudi Arabia's production is expected
to respond to lower direct crude burn for
electric power generation as seasonal
power demand abates. (In addition), there
is considerable uncertainty regarding
Iraq's ability to sustain its higher production and export levels."
The August STEO projects OPEC's
surplus crude oil production capacity will
decrease to an average of 1.6 MMbbl/d
in 2015, then increase to 2.1 MMbbl/d in
2016.
Demand And Prices
EIA estimates global petroleum consumption will grow by 1.3 MMbbl/d this
year after averaging 92.4 MMbbl/d in
2014. The August STEO revises upward

168 THE AMERICAN OIL & GAS REPORTER

EIA's estimate of 2016 global consumption growth by 100,000 bbl/d to an average
of 1.5 MMbbl/d.
A majority of that increase comes from
non-OECD countries, which EIA projects
at 800,000 bbl/d in 2015 and 1.2 MMbbl/d
in 2016. "Despite its economic slowdown
in the second half of 2014 and thus far in
2015, China continues to be the main
driver of non-OECD consumption growth,"
EIA observes. "China's consumption is
expected to grow an average of 300,000
bbl/d in both 2015 and 2016."
The United States, where EIA is predicting demand growth of 400,000 bbl/d
(2.1 percent) this year and 190,000 bbl/d
next year, accounts for most of the OECD
demand growth, which EIA projects at
500,000 bbl/d this year and 300,000 bbl/d
in 2016.
The August STEO predicts Brent crude
oil prices will average $54.40 a barrel
this year and $59.42 in 2016, which EIA
says is $6 and $8 a barrel less than the
July STEO prediction. West Texas Intermediate prices, meanwhile, are projected
at $49.62 and $54.42 a barrel in 2015
and 2016, respectively.
"The oil market faces a host of uncertainties heading into 2016, including the
pace and volume at which Iranian oil reenters the market, the strength of demand
growth, and the responsiveness of nonOPEC production to low prices," EIA
assesses. "In the more immediate future,
there is potential downward price pressure
heading into the fourth quarter if refinery
runs drop by more than expected during
the fall maintenance season."
Natural Gas
The August STEO projects Henry
Hub natural gas prices will average $2.89
an MMBtu for 2015 and $3.21 in 2016,
which EIA notes is down slightly from
its July forecast.
"Natural gas storage totaled 2.912 trillion cubic feet on July 31, which was 23
percent higher than a year earlier and 2
percent higher than the five-year average,"
EIA comments. "Inventories began the
injection season about 173 billion cubic
feet lower than the five-year average,

American Oil and Gas Reporter - September 2015

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