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The growing global impact of shale

Hydrocarbon Engineering,

PIRA Energy Group has announced the launch of a new multi-client study: ‘Shale Crude’s Growing Global Impact: Consequences for Trade Flows and Pricing Within and Beyond North America’s Borders’.

Dr. Gary Ross, CEO, said: “PIRA’s new study will incorporate the insights from its very popular top, middle and bottom of the barrel studies, creating the most comprehensive analysis of the implications of North American shale on global crude and product markets that the industry has seen.”

Some of the key findings of the study are:

  • As the US has already cut back sharply on light crude imports, future production growth will displace medium/heavy imported grades, with US refiners accommodating through modest capital projects and operational changes (e.g. blending). Crude/condensate exports from the US would ease the transitions for refiners and help stabilize price, if allowed.
  • US refiners processing local crude or imports priced competitively with local crude will see string margins. Utilisation rates will remain high, particularly in PADDs 2 and 3. Although capacity will be limited, overall runs will grow. Product export growth will slow as runs growth slows, but will ultimately increase due to lower gasoline demand due to increasing vehicle efficiency and substitution of natural gas for diesel trucking.
  • In China, the Middle East and India, refinery capacity and runs will increase rapidly. Growth will also take place in the US, Brazil and Russia. European refinery runs will decline sharply, pressurized by declining demand and imports from Russia, the US, and the Middle East. Runs in Japan and Australia will also decline.
  • US product exports of gasoline and diesel will be mainly to Latin America, and eventually West Africa. Middle East product exports will increase rapidly, mostly middle distillates for export to Asia, East Africa and Europe. Russian exports of light products will increase, mostly to Europe. However, vacuum gasoil/feedstock exports face rapid decline.

The full study, which will be available from late May, features:

  • An outlook for global crude and major product trade based on regional supply/demand balance.
  • Gross import-export balances for crude and major products for select key countries/regions.
  • Regional crude supply/demand and refinery run balances by major crude grade.
  • A Reference Case global supply/demand balance and a summary of the key assumptions with the greatest range of uncertainty. PIRA uses these assumptions to develop alternative outcomes for volumes, costs and pricing.
  • PIRA’s most likely outlook for total global liquids production, with special emphasis on the potential contribution of shale crude.
  • The likely change in the demand fro crude and product tankers.
  • Identification of the likely winners and losers in the global energy industry as global crude production progresses.

Adapted from press releases by Emma McAleavey.

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