EIA: US oil production to jump 25%

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Updated 09 January 2013
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EIA: US oil production to jump 25%

NEW YORK: US crude oil production is expected to rise by the largest amount on record in 2013, the Energy Information Administration said on Tuesday, and is set to soar by almost a quarter over the next two years.
The EIA, the independent statistical arm of the Department of Energy, said US crude oil production would grow by 900,000 barrels per day (bpd) in 2013 to 7.3 million bpd. The agency's forecast in the monthly Short-Term Energy Outlook is 300,000 bpd higher than its estimate in December.
While the rate of increase is seen slowing slightly in 2014 to 600,000 bpd, the total jump in US oil production to 7.9 million bpd would be up 23 percent from the 6.4 million bpd pumped domestically in 2012.
The rapid increase underscores how improvements in horizontal drilling and hydraulic fracturing technology -- commonly referred to as “fracking” — have transformed the United States energy market in the last five years, allowing producers to tap shale oil from tight rock formations.
The latest forecast from the EIA is the first to include 2014.
If the agency's projections prove accurate, US crude oil production will have risen by a massive 40 percent between 2011 and 2014. It will be almost 50 percent higher than at the beginning of the decade, bolstering the argument of those who say North America could be energy independent by the end of the decade.
Adam Sieminski, administrator of the EIA, said that as output in North Dakota's Bakken formation and Texas's Eagle Ford fields has risen sharply over the past 12 months, US producers were becoming even more prolific.
"The learning curve in the Bakken and Eagle Ford fields, which is where the biggest part of this increase is coming from, has been pretty steep," Sieminski said.
While he cautioned that the long-term outlook beyond 2020 suggested production from shale fields in the United States may plateau, he said it was possible analysts were still underestimating the potential of U.S. shale oil output in the short-term.
The EIA said in the forecast that the rise in US output would contribute to a well supplied market over the next two years. The agency said that international Brent crude oil prices would fall slightly in 2013 to around $105 a barrel on average from just under $ 112 last year, before falling to $ 99 a barrel in 2014.
US benchmark West Texas Intermediate is seen averaging $ 89 a barrel in 2013 and $ 91 a barrel in 2014.
Global oil demand is forecast to rise by 900,000 bpd in 2013 to 90.1 million bpd led by fast-developing countries like China and India and is seen rising by a further 1.4 million bpd in 2014, the EIA said.
Indeed, in 2014, developing countries are seen making up more than 50 percent of total global oil demand for the first time, surpassing the consumption of countries in the Organization for Economic Cooperation and Development (OECD).
World oil supply is seen surpassing demand growth over the next two years, however, forcing the Organization of the Petroleum Exporting Countries (OPEC) to curb production, the EIA said.
Non-OPEC production is forecast to increase by 1.4 million bpd in 2013 and by 1.3 million bpd in 2014, the EIA said, though the agency warned there are "considerable risks" to the forecast due to the rapid pace of the evolution of the North American oil industry and geopolitical threats to supplies.
The EIA said OPEC would continue to pump more than 30 million bpd to help meet demand, but said it would likely curtail production by about 600,000 bpd this year to help balance the market and support prices.


Hyundai teams up with VW’s Audi to boost hydrogen cars

Updated 9 min 12 sec ago
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Hyundai teams up with VW’s Audi to boost hydrogen cars

LONDON: Hyundai agreed a deal with Audi on Wednesday to collaborate on hydrogen car technology, hoping to boost an energy segment that has lagged behind battery electric vehicles.
The South Korean firm wants to increase the uptake of hydrogen cars, which are propelled by electricity generated by fuel cells but have been held back by a lack of infrastructure and the push for battery electric vehicles by the likes of Tesla.
The pair will be able to access each other’s intellectual property and share components, including any new parts developed by Audi, which is responsible for hydrogen fuel cell technology in the Volkswagen Group, the world’s biggest car seller.
Hyundai hopes that the move will create greater demand for vehicles such as its ix35 model and bring down costs to make the technology profitable.
“We want to provide to our component suppliers more chance and we want to have competition between component suppliers,” Sae Hoon Kim, the head of Hyundai’s R&D fuel cell group, told Reuters in an interview in London.
“We also want to make them to have competition with other suppliers, and that competition will bring down the cost.”
Carmakers such as Toyota have touted the benefits of hydrogen vehicles, which take less time to refuel than the recharge times of battery electric cars, but are expensive and suffer from a lack of refueling stations.
Many carmakers are focusing on battery electric vehicles, which can take between half an hour and half a day to recharge, but are increasingly able to use a growing network of charging points.
Auto firms are teaming up to share the cost of developing greener technologies to replace combustion engines as regulators around the world crack down on emissions. GM and Honda have a partnership to jointly develop electric vehicles with hydrogen fuel cells that are expected to go on sale in 2020, while BMW is working with Toyota.
Kim said that a toughening of European Union carbon emission limits in 2025 would create a need for more hydrogen cars.
Hyundai sold 200 such models last year and expects to sell thousands this year, but Kim said profitability was still far off.
“100,000 or 300,000 vehicles per year per company, when that comes, I think we can make money,” he said.