Surplus capacity of global crude oil production in non-OPEC countries has declined by 80% since 2021 as new pipeline projects and production come online in the United States.
According to the U.S. Energy Information Administration (EIA), the surplus capacity in non-OPEC countries decreased to about 280,000 barrels per day in May, from 1.4 million barrels per day in 2021. The report shows about 60% of the surplus capacity was in Russia, and all of that capacity was eliminated because of sanctions implemented after Russia’s invasion of Ukraine.
Excess oil production capacity also fell in other non-OPEC and OPEC countries, according to the report. OPEC surplus capacity fell to 3 million barrels per day in May, from 5.4 million barrels per day in 2021.
According to the EIA, nine new natural gas and crude oil fields are expected to start operating in 2022 in the U.S. Federal Offshore Gulf of Mexico, but the additional capacity won’t increase annual production levels there, only offset the falling levels.
By the end of 2023, the new fields will account for 14% of crude oil and 5% of natural gas production in the U.S. Federal Offshore Gulf of Mexico. In 2021, 15% of all U.S. crude oil and 2% of U.S. natural gas were produced there.
In 2023, crude oil and natural gas production there are expected to be an average of 1.8 million barrels per day and 2.1 billion cubic feet per day, respectively. From 2022 to 2023, crude oil production is projected to be flat, while natural gas production is expected to fall by 0.1 billion cubic feet per day. No new fields are planned to start there in 2023.
As of June, pipeline companies have completed two crude oil pipeline projects in the United States, according to the EIA. By the end of this year, four more projects are set to be completed. However, an additional 13 projects have been canceled, and two projects are temporarily on hold. The status of five others is unknown.
Following are the completed projects:
- Energy Transfer Ted Collins Pipeline, with a 275,000 barrel per day capacity, transports crude oil along the Gulf Coast from the Nederland terminal to the Houston Ship Channel, both of which are in Texas.
- Energy Transfer Cushing South Phase II is a 55,000 barrel per day expansion of the Cushing South project that includes three existing Energy Transfer pipelines and a reversal and interconnection with the Centurion pipeline, which transports crude oil from terminals in Platteville, Colo., and Cushing, Okla., to Energy Transfer’s terminal in Nederland, Texas.
According to the AAA, crude oil prices fell recently but remain above $105 per barrel. Also, gasoline prices declined to an average of $4.94 a gallon for regular unleaded. In Arkansas, the average price was $4.49 per gallon, the fifth-lowest in the United States. California motorists are paying the most at $6.36 a gallon. Georgia was the least expensive at $4.44 per gallon.
“Drivers are seeing minor relief at the gas pump with prices dropping an average of 9 cents a gallon compared to last week,” said AAA spokesman Nick Chabarria. “Prices could fluctuate as the busy Independence Day holiday approaches. Despite unusually high gas prices, automobile travel is expected to set a new record with 42 million Americans driving to their holiday destination. The record travel could put more pressure on demand at a time when supplies are very tight.”