According to Tony Chovanec, senior vice president of fundamentals and supply appraisal for Enterprise Products Partners LP, U.S. oil, gas and NGLs continue to grow at a rapid pace, with almost all of that growth stemming from the Permian Basin and Eagle Ford play.
Chovanec sourced this information from research conducted by Enterprise petroleum engineers and geophysicists "who put together a forecast for production of different molecules -- oil, gas and NGLs -- in the United States," he said. "We look at each play, and our new forecast for oil is to have the growth of 5 million barrels a day of oil by 2025."
That's an increase from 12 million barrels a day to 17 million a day within six years.
"The industry is improving so much that every time we do this forecast, we up our expectations," Chovanec said at the Industrial Procurement Forum recently hosted by the Economic Alliance Houston Port Region and BIC Alliance in Pasadena, Texas.
Chovanec recalled that in 2012, the U.S. produced just 6 million barrels of oil.
"In six years, we've doubled production despite the downturn of 2015 and 2016," he said.
The Enterprise survey also forecasts NGLs will grow from 5.5 million barrels a day to 8.5 million barrels per day.
"That's big growth, because with NGLs, you can get them from oil and from gas at the same time, so you get a double source of supply for NGLs," Chovanec said.
Further, natural gas is growing by 26 billion cubic feet per day (bcfd) to 114 bcfd.
"And there's plenty of gas available in the United States," Chovanec said. "Most of the oil plays in the U.S. today are very economic and very competitive at the WTI (West Texas Intermediate) price of $40 or above. And these economics are only improving with time."
Driving economics and competitiveness
The Permian, which is a major source of recent growth for the industry, consists of approximately 22 million acres of productive acreage.
"About 12 of those are what is called the Top Tier, and the remaining, about 9 million acres, is the Tier 2 acreage," Chovanec explained. "But if you look beneath the surface, the Permian has different stacked layers of shale -- five to 12 layers, depending on the area."
Chovanec compared this stacking to a layer cake.
"Think about it as a layer cake," he said. "Each of these layers is the shale layer that producers are drilling and extracting oil from."
Chovanec estimated "just in the core only" 35-50 years of drilling remain in the Permian at the current rate.
In 2007, the U.S. Geological Society determined the Permian contained at least 1.3 billion barrels of oil.
"And the Permian has three basins: Delaware, Midland, and the Central Basin," Chovanec observed. "That gives you an idea of how big and vast the resources are in the Permian."
In 2018, that assessment for the Delaware basin alone was at 46 billion barrels.
"The Permian is a world-class resource -- very economic, very powerful -- that's changing the landscape of energy in the United States and globally," he said.
Switching focus to the Houston Ship Channel, Chovanec noted that in 2018, two-thirds of hydrocarbons exports from the U.S. were transported through the channel. That translates to about 4 million barrels per day of liquid hydrocarbons with an economic value of $93 billion.
"If the Ship Channel is to maintain this market share of exports, and if we keep exporting two-thirds of these products, we expect that in 2025 the channel will be handling almost 9 million barrels per day of liquid hydrocarbons, with a total value of almost $220 billion," Chovanec said, urging the channel "to keep flowing" in two-way traffic to facilitate these exports.
