Betting on the Next Oil Boom? You’re Grasping at Straws
Unplanned interruptions in the global oil supply chain last year were about 30 percent higher than in 2013, the U.S. Energy Department said. Much of the problem was blamed on Libya, though sputtering from Kazakhstan’s giant Kashagan field played a factor as well. This year could be the time North America leads in terms of secure production, but the story for 2014 is as certain as the market predictions themselves.
The U.S. Energy Information Administration said crude oil supply disruptions from OPEC averaged 1.8 million barrels per day, but actually hit the 2.6 million bpd by the end of the year because of on-again off-again supplies from Libya. The Organization of Petroleum Exporting Countries said its production in 2013, excluding Iraq, was 3.1 percent less than the previous year.
Outside of the cartel, last year’s major breakthrough came when first production started from the giant Kashagan field off the Kazakh coast in the Caspian Sea. Lauded as one of the biggest oil developments this side of Texas, Kashagan ground to a halt about a month after production began because of pipeline leaks. EIA said that even if it gets going again, production from Phase 1 will be off the 370,000 bpd target because cost overruns and technical challenges.
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For the U.S. Gulf of Mexico, EIA said it expected to see production grow by more than 20 percent from its 1.3 million bpd average in 2013 in the coming years. Its estimate, however, comes with a degree of uncertainty given the risks from extreme weather events in the region. Given the devastating winter in the United States this season and historic flooding overseas, it’s anybody’s guess what future hurricanes will do to Gulf of Mexico production, which accounts for about a fifth of total U.S. output.