US can bank on plentiful domestic natural gas, but should
expect a continued reliance on foreign oil, according to oil
and gas decision-makers who participated in a new Deloitte
survey released on Tuesday.
Three-quarters of the survey respondents think the US
is already natural gas self-sufficient, or will be within 10
When it comes to oil, however, survey respondents are far less
optimistic about the ability to meet American demand with
domestic supplies: 54% say the US will never be completely oil
self-sufficient, and only 26% say oil self-sufficiency is
achievable in the next 10 years.
Deloitte said it believes that if the question of oil
self-sufficiency had been expanded to include all of North
America, the results would likely have been different.
Given North Americas remarkable success with
unconventional oil both tight oil in places like North
Dakota and oil sands in Canada something closely
resembling self-sufficiency is arguably within reach,
said Peter Robertson, an independent senior advisor to Deloitte
and former vice chairman of Chevron.
When you combine unconventional oil supplies with the
recently established increase in shale gas reserves, you could
have the makings of a true energy renaissance.
Deloitte conducted the survey in late October and canvassed 250
oil and gas professionals from a decision-making demographic:
Respondents were 48 years old on average and had an average of
20 years experience in the industry. All had college or
graduate degrees and earned over $100,000 per year.
Its not surprising that oil and gas decision-makers
are enthusiastic about the role of natural gas in our national
energy future, given burgeoning supplies, Americas
comparatively low cost of extraction, and its relative
cleanliness, said John England, vice chairman of Deloitte
and leader of Deloittes oil and gas practice.
What is surprising is that natural gas is a fuel source
that we were aggressively preparing to import at high world
prices just a few years ago.
Tale of two prices
Looking at 2013, oil and gas professionals see natural
gas prices remaining quite low with 40% predicting
prices less than $3/MMBtu, and a large majority (86%)
predicting Henry Hub prices under $4/MMBtu. More
4% see prices below $2/MMBtu.
36% see prices between $2 and $2.99/MMBtu.
46% see prices between $3 and $3.99/MMBtu.
14% see prices above $4/MMBtu.
Crude oil prices, on the other hand, are expected to remain
relatively strong next year. The majority of respondents (57%)
think the average cost of a barrel of West Texas Intermediate
oil in 2013 will be between $80 and $99/bbl. More
2% see prices below $80/bbl.
17% see prices at $80 to $89/bbl.
40% see prices at $90 to$99/bbl
28% see prices at $100 to $109/bbl.
7 % see prices at $110 to $119/bbl.
5% see prices above $120/bbl.
Shale plays on right track
Regarding natural gas regulations, almost half (49%) think
regulations related to hydraulic fracturing are just
right or evolving, but on the right track
but a minority (39%) still believe there is too
much regulation. Just 5% say there is too little
regulation and 7 say they are unsure.
Meanwhile, a clear majority (63%) of oil and gas
professionals supports regulations requiring producers to
disclose the contents of their hydraulic fracturing fluids
with only 24% in opposition. About 1 in 10 (13%) are
Looking at the issue
of shale gas resource estimates, a majority (51%) of oil and
gas insiders believe that current industry estimates for the
amount of recoverable resources are pretty much on
target with 23% saying they are somewhat
overestimated and the exact same amount saying they are
Extremely few think shale resources are very
overestimated or very underestimated
1% and 2%, respectively.
It seems clear that oil and gas professionals believe
America has a veritable bounty of shale gas resources,
said Roger Ihne, principal for Deloitte Consulting, serving the
oil and gas sector. In simple terms, over 95% think the
current industry estimates are accurate or not far
LNG exports, stable prices expected
With the large resource base of natural gas in the US, industry
professionals foresee continued low prices and new market
Most survey respondents think that the abundance of shale
gas will lead to liquefied natural gas (LNG) exports. A large
majority (72%) expect that LNG export terminals will eventually
receive government approval with 36% believing this
approval will occur before 2014 and the exact same percent
expecting approval after 2014.
Similarly, the survey found that even with exports of LNG,
most oil and gas decision-makers dont see a meaningful
increase in domestic natural gas prices. A strong majority
(93%) sees either no price increase or a slight change in
price. In contrast, less than 1 in 10 (7%) see a significant
Given the reserve estimates and current supplies, it
only makes sense that natural gas producers are keen to develop
new uses for their gas," said Ihne. "One possible option
that stood out among survey respondents was use as a
When asked to identify the best alternative transportation
fuels to gasoline and diesel, survey respondents clearly
preferred natural gas with 67% seeing products like
compressed natural gas (CNG) as the most promising option to
refined oil products, far ahead of other top choices like
electricity (11%) and biofuels (8%).
Clarity on Keystone XL, M&A and capital spending
The survey also looked at
a host of other pressing issues facing oil and gas companies
today. Most notably, it found that:
A large majority (78%) of respondents expect that the
Keystone XL pipeline will eventually receive government
approval with 42%expecting approval in 2013 and 36%
expecting approval in 2014 or later.
Most oil and gas professionals expect increased capital
spending in 2013: More than half (59%) predict much
more or somewhat more spending. About 1 in 3
(35%) expect spending to remain the same, and only 6% expect it
A majority of oil and gas decision-makers expect mergers
and acquisitions to remain steady next year: 53% expect
much more or a little more activity and
42% think it will remain about the same. Only 5%
expect less activity.
Well over half (65%) of all respondents see an increase
in exploration and production in the Gulf of Mexico, while 26%
expect activity levels to remain the same. Less than 1 in 10
respondents (9%) expect a decrease.
Oil and gas professionals see a steady outlook for refining, with a majority expecting
profitability in 2013 to stay the same (42%) or increase