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Uncertainty is Clouding the Energy Trading Outlook

A ComTech Advisory Whitepaper

THE CHANGING NORTH
AMERICAN ENERGY ECONOMY
North America, and more particularly the
US, has in the last 5 years seen a dramatic
shift in its energy economy, moving from
a country that had been increasingly reliant on imported oil (up to 45% in 2004) to
one that is rapidly displacing those imports
with newly found domestic production. This
energy renaissance has been fueled by advances in horizontal drilling and hydraulic
fracturing technologies have opened new
and abundant sources of natural gas and
crude oil that were once tightly locked in
shale and tight sand deposits.

The increase in energy production is unprecedented and has moved the
US up to the second largest oil producer in
the world, trailing only to Saudi Arabia.

Though US oil demand is expected to continue to outstrip domestic production for the foreseeable future, increasing
tar sands production in Canada is expected to contribute to increased supplies from
that country, further reducing US reliance
on imports from volatile Middle Eastern
and South American countries.
Since 2007, natural gas production from
shale fields has increased from about 3 BCF
per day to more than 28 BCF per day, with total US production increasing from 55 BCFD
in 2007 to an estimated 72 BCFD in early
2014. Oil production from shale reserves
has helped push US crude production from
slightly more than 5 million barrels per day in
2008 (a more than 50 year low), to almost 8
million barrels per day in 2013 (a twenty-plus
year high).
© Commodity Technology Advisory LLC, 2014

While these new production sources have helped the US
reduce its reliance on foreign sources of oil and have brought
about a boon in economic growth in many parts of the country,
incorporating the increasing volumes of shale gas and oil has
not been without issue. Given that much of this new production
has been found outside the reach of the traditional production
and transportation infrastructure, the industry is facing a number of significant challenges to move those supplies to market.
These challenges include lack of adequate pipeline capacity in
proximity to the new fields, the disruption of historical supply
patterns, and increasing price uncertainty as these new fields
continue to ramp volumes into areas that are increasingly oversupplied and bottlenecked.