API’s Chief Economist warns of restricted energy supply, growing future demand. #rsrh

Link: API’s Chief Economist warns of restricted energy supply, growing future demand. #rsrh

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API: US demand grows, but policies may stymie production

WASHINGTON, DC, Jan. 21 — Stronger US petroleum deliveries for all of 2010 as well as December reflected a growing US economic recovery, the American Petroleum Institute said. But its chief economist warned that Obama administration policies could restrict growth of US crude oil production to help meet higher US demand in the future.

“We continue to try to improve production, but there are challenges going forward,” John C. Felmy said in a Jan. 21 teleconference. “There was the Gulf of Mexico moratorium, and now there’s what is called the ‘permitorium.’ We’ve seen permits retracted and not moved forward onshore, which is disappointing because we have some bright prospects, particularly in North Dakota’s Bakken formation. We’ve also seen onshore natural gas prospects threatened by potential regulatory change, particularly involving hydraulic fracturing. We should have a good thorough discussion of what we can do to increase our production instead.”

US oil production rose by 1.3% in December to an average 5.52 million b/d from 5.45 million b/d a year earlier, according to API. Full-year production averaged 5.49 million b/d in 2010 compared with 5.36 million b/d in 2009. Production continued to grow year-to-year during December in the Lower-48 to an average 4.87 million b/d, 1.4% more than a year earlier, as it declined in Alaska to about 652,000 b/d, lower than December 2009’s 655,000 b/d average.

“There’s a vast amount of oil to be produced in this country,” Felmy told reporters. “In the next 2 years, we could start moving forward and get ready for the following 10 years. We can move forward by approving permits, opening up exploration, and taking other positive steps. We have in excess of 116 billion bbl of oil in the United States. We have a lot of opportunities.”

Proper government policies could lead to substantial US oil development, which would produce jobs, generate revenue for the government, and improve the US economy as well as its crude supply situation, Felmy said. “The administration’s policies so far have been focused on renewables, and most of that has involved electricity. Crude oil markets are a worldwide phenomenon, and the US should be concentrating on producing more of its own resources,” he said.

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