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Market Size of Oil and Gas in North America

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In 2005, the average demand for oil in North America was estimated to be 25.45m b/d while average supply was projected at around 14.09m b/d (Figure 7.1) . Canada and Mexico were able to sustain local demand with their own production but the US relied heavily on imported oil (65%). In 2001-05, oil consumption in North America is estimated to have grown at a CAGR of 1.9% and supply has grown at a CAGR of 0.3% (Figure 7.4) . In terms of oil consumption, Mexico has a share of about 7.7% in the regions oil consumption whereas Canada has a share of 9%.

Natural gas consumption in North America between 2001 and 2005 is estimated to have grown at a CAGR of 0.8% to 788.2 bcm, but production of is projected to have fallen by a negative CAGR of about 0.7% during the same period to 764.3 bcm (Figure 7.2) . Mexico consumes 6.1% of the regions natural gas consumption whereas Canada has a 11.4% share of the regions natural gas consumption. Between 1995 and 2004 there has been a significant fall in new reserve findings for both oil and gas (Figure 7.5) .

In 2010, North America held 5.4 % of the global oil reserves (Figure 2.1) . In 2010, the average demand for oil in North America was estimated to be 23.9 million barrels/ day (m b/d) while average supply was projected at around 15 m b/d. In 2010, while the average demand increased by 2.5%, the average supply increased by 4.2% as compared to the 2009 figures (Figure 2.2) . In terms of oil consumption, in 2010, Mexico had a share of about 8.5% in the region’s oil consumption whereas Canada had a share of 9.7%.

According to British Petroleum (BP) Statistical Review of World Energy 2011, North America holds 5.3% of global gas reserves (Figure 2.3). Natural gas consumption in North America between 2005 and 2010 has grown from 774.9 billion cubic meters (bcm) to  846.1 bcm, and the production has grown from 743.3 bcm to  826.1 bcm during the same period. In 2010, Mexico and Canada’s share of region’s natural gas consumption was 8.14% and 11.08% respectively.

Between 2006 and 2010, while there has been a decline in the proven crude oil reserves of North America, the proven natural gas reserves have increased slightly.

In 2010, the refinery capacity of North America was 20.971 million barrels/day (m b/ day),  a decline of 0.7% compared to the 2009 figures. During 2006-2010, the refinery throughput in the region decreased from 18.484 m b/ day to 17.733 m b/ day.

In 2010, the refinery capacity of North America was 20.971 million barrels/day (m b/ day),  a decline of 0.7% compared to the 2009 figures. During 2006-2010, the refinery throughput in the region decreased from 18.484 m b/ day to 17.733 m b/ day.

For several decades, there was a general perception held by governments, public and even by the Oil and Gas industry (O&G) that share of North America in  oil and natural gas production potential has been  steadily  declining. However, the picture is fast changing and North America is bouncing back into top 3 regions, thanks to effective deployment of technologies (like horizontal drilling and multi-stage hydraulic fracturing) and scaling up production of oil and gas from non conventional sources, like shale gas.

Demand-Supply in the US

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In North America, the US is the largest consumer of oil and gas and it plays a vital role in the global supply and demand dynamics of the industry,  accounting for nearly 25% of global consumption in 2005 with average oil consumption estimated to be about 20.73 million barrels per day (m b/d.) Domestic crude oil production is estimated at 7.15m b/d. During the period 2001-05 demand for oil in the US grew at a compound annual growth rate (CAGR) of 1.3%, while supply has decreased at a CAGR of 1.8% (Figure 7.6) .  Although the US has been trying to reduce its dependence on foreign oil, the large gap that exists between supply and demand means that it is heavily dependent on crude oil imports. Major US crude oil imports come from Canada, Mexico, Saudi Arabia and Nigeria. In 2005, among the major suppliers, Canada saw its share increase from 16% to 20%, while Mexico, Saudi Arabia and Nigeria had a constant share of 18%, 14% and 13% respectively.

As with oil, natural gas is also a very important source of energy in the US. Unlike oil however, the US is able to meet more than 80% of its natural gas requirement through domestic production. The US is the largest consumer of natural gas in the world, accounting for nearly a quarter of global consumption. During 2001-05, annual consumption of natural gas in the US grew marginally at a CAGR of 0.23% to 647.2 bcm, while domestic supply has fallen at a CAGR of 1.4%, to 534.7 bcm (Figure 7.7) . Major natural gas imports by the US in 2005 were from Canada, Trinidad and Tobago, Algeria and Egypt, with Canada being the largest supplier.

In North America, the US is the largest consumer of oil and gas and it plays a vital role in the global supply and demand dynamics of the industry with average oil consumption estimated to be about 19.18 million barrels/ day (m b/ day) in 2010. Domestic oil production in 2010 was estimated to be 9.69 m b/day (Figure 2.7) . During the period 2005-2009 demand for oil in the US declined but rose again in 2010. However, during 2005-2010, supply has increased.  Although the US has been trying to reduce its dependence on foreign oil, the large gap that exists between supply and demand means that it is heavily dependent on crude oil imports. Major US crude oil imports come from Canada, Mexico, Saudi Arabia and Nigeria. In 2010, US imported 9183.9 thousand barrels of crude oil daily.

Apart from oil, natural gas is also a very important source of energy in the US. Unlike oil however, the US is able to meet more than 80% of its natural gas requirement through domestic production. The US is the highest consumer of natural gas in the world, accounting for  21.1% of global consumption in 2010. During 2006-2010, annual consumption of natural gas in the US grew from 21.70 trillion cubic feet (Tcf) to 23.80 Tcf, while domestic supply has increased from 18.50 Tcf to 21.10 Tcf during the same period (Figure 2.8) . Major natural gas imports by the US in 2010 were from Canada, Trinidad and Tobago and Egypt, with Canada being the largest supplier.

The US crude oil production was at a high in early 1970s, with production levels of 9.6 million barrels per day (m b/d). However 1985 onwards, production started declining. However, during 2007–2011, oil production in the US showed an increasing trend except in 2008.

As of 2011, the US is one of the largest consumers of O&G and it plays a vital role in global supply and demand dynamics of the industry. The US is also the largest producer of natural gas and one of the largest producers of oil.