By Rob Starr, Content Manager, Big4.com
US oil production topped the list of the big oil and gas stories in 2012 . In 2013, the US will remain the largest source of new oil growth worldwide aided by the shale boom, but surpassing Saudi Arabia as the globe’s top oil producer by 2020 will be a challenge.
While US oil output growth is expected to continue to be strong, it’s going to be hard to rival Saudi Arabia. US oil production comes at an extremely high cost. Some anticipated increases in domestic oil production may not materialize if crude prices decline below $80 a barrel.
Marcela Donadio, Americas Oil and Gas Leader for the global Ernst & Young organization comments:
“Whether the US will become the world’s top producer is not the most important thing to focus on,” she said. “What matters is the dramatic reversal of the US energy fortunes and the need for the US to take significant steps to ensure oil supply growth continues. Coherent energy policy, access to resources, improved infrastructure and economic stability are all key to future success.”
Profit margins for the US refining business were up across the board in 2012, with Midwest refineries having another stellar year thanks to access to cheaper WTI and Canadian crudes. While expected to diminish somewhat, the structural imbalances in the US Midcontinent are expected to continue this year, prolonging the advantage of regional refiners that have access to cheaper US oil supplies.