Oil and Natural Gas Transportation and Storage Infrastructure...2013 torrent

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Over the past five years, unconventional oil and gas activity has thrust the nation into an unexpected position. The U.S. is now the global growth leader in crude oil production capacity growth, adding nearly 1.2 million barrels per day (mbd) of capacity over the 2008 – 2012 time period1. In addition, the U.S. is now the largest natural gas producer, at 65 billion cubic feet (Bcf) per day2. At the same time, unconventional activity is spurring the growth of natural gas liquids (NGLs) production, adding over 500,000 barrels of oil equivalent (boe) per day since 20083. This has brought the total increase in liquids production capacity to some 1.7 mbd since 2008. Driven by growth in U.S. natural gas, natural gas liquids, and crude oil, the past 2 years have witnessed rapid growth in direct capital investment toward oil and gas infrastructure assets. IHS estimates that capital spending in oil and gas midstream and downstream infrastructure has increased by 60 percent, from $56.3 billion in 2010 to $89.6 billion in 2013. This increase in capital spending has provided both an economic stimulus and an incisive data point into how shale driven oil and gas production is reshaping the U.S. oil and gas infrastructure landscape. As this period of high infrastructure investment, which began after the 2008-2009 financial recession, continues to progress it will largely reverse a macro energy infrastructure trend that began taking shape in the early 1970’s. Many of the major oil and gas infrastructure investments made for the past 30 years have been premised under the assumption of decreasing domestic production, increasing energy imports, and the need to move imported energy from coastal receiving ports to inland demand centers. A large portion of the projects being developed during this sustained infrastructure investment period will shift the U.S. two scenarios – a base case, reflecting the IHS view of the most likely path of oil and gas production over the 2014-2025 time frame, and a high production case, reflecting a 20 percent increase in natural gas, natural gas liquids, and crude oil production above the base case that could be associated with expanded access to current off limit areas in Atlantic, Eastern GOM, Pacific and Alaska towards being energy trade balanced and add key infrastructure segments that enable growing energy production in the Midcontinent region to reach demand centers on the US Gulf Coast and Eastern seaboard. The purpose of this study is two-fold: to provide a comprehensive assessment of required investment in oil and gas transportation and storage infrastructure through 2025; and to assess the economic impacts associated with this investment, in terms of employment, contribution to GDP (Value Added), labor income, and tax revenues. The analysis of infrastructure investments examines significant trends both during an historical period – 2010 through 2013 – and on a forecast basis, 2014 – 2025. It focuses on energy types supported by investment, including Natural Gas, NGLs and LPG, Oil and Condensate, Refineries and Refined Products, and Common Infrastructure. The economic impact assessment is developed on the basis of average annual investments from 2014 through 2025. Both the analysis of infrastructure spending and the resultant economic impact assessment are developed under two scenarios – a base case, reflecting the IHS view of the most likely path of oil and gas production over the 2014-2025 time frame, and a high production case, reflecting a 20 percent increase in natural gas, natural gas liquids, and crude oil production above the base case that could be associated with expanded access to current off limit areas in Atlantic, Eastern GOM, Pacific and Alaska