(EnergyAsia, December 24 2012, Monday) — America can bank on plentiful domestic natural gas, but will have to continue relying on foreign oil, according to 250 oil and gas decision-makers who participated in a recent Deloitte survey.
Three-quarters of the respondents think the US is already natural gas self-sufficient, or will be within 10 years.
When it comes to oil, however, survey respondents are far less optimistic about the nation’s ability to meet American demand with domestic supplies: 54% say the US will never be completely oil self-sufficient – and only 26% say oil self-sufficiency is achievable in the next 10 years.
Deloitte believes that the answers would have been different if the question of oil self-sufficiency had been expanded to include all of North America.
“Given North America’s remarkable success with unconventional oil – both tight oil in places like North Dakota and oil sands in Canada – something closely resembling self-sufficiency is arguably within reach,” said Peter Robertson, a senior advisor to Deloitte and former vice chairman of Chevron Corporation.
“When you combine unconventional oil supplies with the recently established increase in shale gas reserves, you could have the makings of a true energy renaissance.”
Deloitte conducted the survey in late October and canvassed 250 oil and gas professionals from a decision-making demographic: Respondents were 48 years old on average and had an average of 20 years’ experience in the industry. All had college or graduate degrees and earned over US$100,000 per year.
“It’s not surprising that oil and gas decision-makers are enthusiastic about the role of natural gas in our national energy future, given burgeoning supplies, America’s comparatively low cost of extraction, and its relative cleanliness,” said John England, Deloitte LLP’s vice chairman, and leader of the company’s oil and gas practice.
“What is surprising is that natural gas is a fuel source that we were aggressively preparing to import at high world prices just a few years ago.”
Looking at 2013, the respondents see natural gas prices remaining quite low – with 40% predicting prices less than US$3 per MMBtu, and a large majority (86%) predicting Henry Hub prices under $4 per MMBtu.
Crude oil prices, on the other hand, are expected to remain relatively strong next year. About 57% of respondents expect think the average cost West Texas Intermediate crude oil to range between US$80 and US$99 a barrel.
Regarding natural gas regulations, 49% think regulations related to hydraulic fracturing are “just right” or “evolving, but on the right track” – but a minority (39%) still believe there is “too much regulation.” Just 5% say there is “too little regulation” and 7% say they are “unsure.”
A clear majority of 63% of the respondents supports regulations requiring producers to disclose the contents of their hydraulic fracturing fluids, with only 24% in opposition and 13% “unsure”.
Looking at the issue of shale gas resource estimates,
A majority (51%) believes that current industry estimates of recoverable shale gas reserves are on target, with 23% saying they are “somewhat overestimated” and the exact same amount saying they are “somewhat underestimated.”
Only a few think shale resources are “very overestimated” or “very underestimated” – 1% and 2% respectively.
“It seems clear that oil and gas professionals believe America has a veritable bounty of shale gas resources,” said Roger Ihne, principal, Deloitte Consulting LLP, serving the oil and gas sector.
“In simple terms, over 95% think the current industry estimates are accurate or not far off.”
With the large gas resource base, industry professionals foresee continued low prices and new market opportunities abroad.
Most survey respondents think that the abundance of shale gas will lead to liquefied natural gas (LNG) exports.
A large majority (72%) expect that LNG export terminals will eventually receive government approval – with 36% believing this approval will occur before 2014 and the exact same percent expecting approval after 2014.
Similarly, the survey found that even with exports of LNG, most oil and gas decision-makers don’t see a meaningful increase in domestic natural gas prices. A strong majority (93%) sees either no price increase or a slight change in price. In contrast, only 7% expect a significant price increase.
“Given the reserve estimates and current supplies, it only makes sense that natural gas producers are keen to develop new uses for their gas. One possible option that stood out among survey respondents was use as a transportation fuel,” said Mr Ihne.
When asked to identify the best alternative transportation fuels to gasoline and diesel, survey respondents clearly preferred natural gas – with 67% seeing products like compressed natural gas (CNG) as the most promising option to refined oil products, far ahead of other top choices like electricity (11%) and biofuels (8%).
The survey also looked at a host of other pressing issues facing oil and gas companies today.
A large majority (78%) of respondents expect that the Keystone XL pipeline will eventually receive government approval – with 42% expecting approval in 2013 and 36% expecting approval in 2014 or later.
About 59% predict increased capital spending in 2013 with 35% expecting it to remain the same, and only 6% think it will decrease.