While onshore crude oil production is expected to account for the bulk of the total production increase through 2015, projected growth also reflects expected increases in offshore production from the U.S. federal Gulf of Mexico (GOM). After offshore GOM oil production was flat at 1.3 million bbl/d in 2013, EIA projects GOM crude oil production will increase to 1.6 million bbl/d in 2015. The expected increases from GOM are the result of the following projects that are expected to come on stream: Jack, St. Malo, Entrada, Big Foot, Tubular Bells, Atlantis Phase 2 redevelopment, Hadrian South, and Lucius in 2014; Axe, Cardamom Deep, Dalmation, Deimos South, Kodiak, Pony, Samurai, West Boreas, Winter, and Mars B redevelopment in 2015.
These continuing increases in crude oil production are having profound effects on U.S. petroleum balances and global oil prices. EIA expects the discount of the WTI crude oil price to Brent to average $12 per barrel (bbl) in 2014, $3/bbl higher than projected in last month's STEO. This increase in the projected WTI discount reflects increasing uncertainty about existing refinery infrastructure's ability to absorb growing production of light sweet crude oil in North America at current price levels. Because of pipeline capacity expansions and pipeline reversals, there is now ample capacity to ship crude oil via pipeline from the previous bottleneck in the Midcontinent to the Gulf Coast. As a result, Light Louisiana Sweet (LLS) crude oil on the Gulf Coast, which was priced at a premium to North Sea Brent for much of the past two years, has recently begun tracking WTI prices and selling at a consistent discount to Brent. Thus, EIA expects the recent convergence of Gulf Coast crude oil prices with WTI to persist over the forecast period, with Gulf Coast crude oil prices moving in step with the WTI price plus a pipeline transport cost. At this price level, Gulf Coast crudes such as LLS and medium-grade Mars will trade at historically wide discounts to similar international benchmarks such as Brent and Dubai, respectively. The forecast relationship between Brent, WTI, and LLS prices in 2015 are similar to those expected in 2014.
Gasoline price flat while diesel fuel up slightly
The U.S. average retail price of regular gasoline increased less than one cent to remain at $3.33 per gallon as of January 6, 2014, three cents higher than last year at this time. Prices increased in all regions of the nation except the Midwest, where the price declined four cents to $3.22 per gallon. The largest increase came on the East Coast, where the price was up three cents to $3.44 per gallon. Both the Rocky Mountain and West Coast prices gained two cents, to $3.12 per gallon and $3.55 per gallon, respectively, and the Gulf Coast price was $3.12 per gallon, a penny higher than last week.
The national average diesel fuel price increased one cent to $3.91 per gallon, less than a penny lower than last year at this time. Prices increased in all regions of the nation, with the East Coast, Gulf Coast, and Rocky Mountain prices all gaining one cent, to $3.95 per gallon, $3.80 per gallon, and $3.90 per gallon, respectively. The West Coast average rose nearly a cent, but remained at $4.03 per gallon, while the Midwest price increased only fractionally, and remained at $3.89 per gallon.