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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.

Oil and Natural Gas Reserves in the US

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During the period 2006-2010, the oil reserves in the US declined from 21,757 million barrels to 19,121 million barrels. In this period there has been a significant increase in new reserve findings for natural gas in the US (Figure 2.9) . Although the oil refining capacity in the region has increased from 17.339 million barrels/day (m b/d) to 17.594 m b/d, refinery through-put has declined during the same period (Figure 2.10) .

The US consumed an average of 19,148 thousand barrels of petro-products per day (tbpd) in 2010, an increase of 2% as compared to the previous year (Figure 2.11). Light distillates constituted the majority of petro-product consumption (48.6% in 2010) followed by middle distillates (28.5%). The balance was accounted for by fuel oil and others.

As of 2011, the US is one of the leading O&G producers of the world; thanks to years of developing technologies, discovering new plays and development of efficient operating practices.

One of the significant developments over the years has been that oil imports in the US have been decreasing while at the same time oil exports have been increasing. Similarly, in the US, while natural gas exports have been rising, imports have been declining. Researchers suggest that the US has a huge potential to supply oil and natural gas even in the future.

Although a lot of uncertainty surrounds the US conventional and unconventional O&G resources, analysts expect unconventional sources of O&G found in the US to have a great impact on the energy supply outlook of the US in future. It is expected that unconventional energy sources such as shale gas, tight gas, gas hydrates and oil shale may add to the US O&G reserves. Further, a better understanding of the resource base can ensure energy security, commercial prospects and competitiveness of the industry.

Major Oil Players in the US

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The major players in the US oil and gas industry are integrated energy giants like ExxonMobil, Chevron Corporation, ConocoPhillips, Royal Dutch Shell and BP Plc. They have a significant share in both the upstream and downstream segments of the US oil and gas industry(Table 7.1) with strong financial performance (Table 7.2) .

In 2009, Exxon Mobil was the leading O&G company in the US with USD233,323 million, USD442,851 million and USD19,280 million in Assets, Revenues and Net Income respectively

Chevron Corp was the second largest O&G company of the US with USD164,621 million, USD263,159 million and USD10,483 million in Assets, Revenues and Net Income respectively

Conoco Phillips was the third largest O&G company of the US with USD152,588 million and USD230,764 in Assets and Revenues respectively

BP Plc and Royal Dutch Shell were the other large oil and gas companies in the US

As per Ernst & Young’s US E&P Benchmark Study 2012 (focusing on large public O&G companies), BP Plc. (BP) was the largest O&G company in the US in 2011, on the basis of revenues.

BP, was the largest company in terms of oil reserves, while Chevron Corporation was the largest company in terms of oil production in 2011.

Exxon Mobil had the largest proven gas reserves in 2011 and it also was the largest gas producers in the US.

Increase in the reserves of oil and gas is attributable to unconventional sources of energy such as shale oil and shale gas.