end user outlook 2022
Gradual recovery: Improvements in oil, gas and electricity demand expected to continue
Gradual recovery // Improvements in oil, gas and electricity demand expected to continue

The number of rotary petroleum rigs operating in the United States as of Sept. 10 totaled 503, up 6 units from the week before and jumping by 249 units from the same week in September 2020, according to Baker Hughes. The number of operating rigs in Canada fell by 9 units from Sept. 3 to 10, but the rig count is still up by 91 units compared with the same week of 2020.

U.S. gasoline consumption averaged 8.6 million barrels per day (b/d) during the first half of 2021, up from 8.3 million b/d in the same six months of last year, but below the 9.3 million b/d in the second half of 2019, according to the U.S. Energy Information Administration (EIA).

EIA’s latest estimates show that gasoline consumption in May through July exceeded expectations. “Growth in employment and increasing mobility have led to rising gasoline consumption so far in 2021,” the agency said in its latest “Short Term Energy Outlook” report. “We expect the trend of rising employment and mobility to continue into next year. Our assumption that a relatively high share of the workforce will continue working from home next year compared with before the pandemic keeps our forecast gasoline consumption below the 2019 level of 9.3 million b/d.”

The agency forecast consumption of natural gas will average 82.5 billion cubic feet per day (Bcf/d) in 2021, down 1 percent from 2020, and will average 83.8 Bcf/d in 2022.

U.S. retail sales of electricity will rise 2.7 percent in 2021 after falling by 3.9 percent in 2020, EIA predicts. The largest increase in electricity consumption occurs in the industrial sector, driven by rising levels of economic output. “We forecast U.S. retail sales of electricity to the industrial sector will grow by 5.3 percent this year.”

Planned additions to U.S. wind and solar generating capacity in 2021 and 2022 will increase electricity generation from those sources. “We estimate the U.S. electric power sector added 14.7 gigawatts (GW) of new wind capacity in 2020 [and that] 17.6 GW of new wind capacity will come online in 2021 and 6.3 GW in 2022.”

Utility-scale solar capacity rose by about 10.6 GW in 2020. “Our forecast for added utility-scale solar capacity is 16.2 GW in 2021 and 16.6 GW for 2022. We expect significant solar capacity additions in Texas,” EIA analysts say.

Evraz Plc., a steel pipe producer, saw demand recover during the first half of 2021, compared with the same period last year. Monthly consumption of oil country tubular goods reached 280,000 tonnes in June, up 99 percent from June 2020, the company stated.

During the first half of 2021, electric resistance weld, OCTG and line pipe prices rose alongside substrate prices, averaging $1,475 per ton and $1,895 a ton, up 26 percent and 59 percent year over year, respectively. Average seamless OCTG prices rose by 16 percent to $1,654 a ton versus a year earlier, the company reported.

“Continued improvement in North American energy tubular products is expected through H2 2021, as oil prices are forecast to remain elevated and crude oil supply tight,” Evraz forecast.

Tenaris SA’s Chairman and CEO told investors in July that the company is “moving quickly to bring production at Bay City, Texas, to full capacity; to step up production for our U.S. and Canadian seamless pipe mills; and to bring online our Ambridge [Pennsylvania] mill and the Baytown finishing facility in Houston.”

During its last earnings call, BP Plc. Group told shareholders that the oil market is “expected to continue its rebalancing process. Global stocks are expected to decline and reach historical levels (in terms of days of forward cover) in the first half of 2022. The expectation is that oil demand reaches pre-COVID levels sometime in the second half of 2022.”

Kinder Morgan owns an interest in or operates about 83,000 miles of pipelines and 144 terminals. It experienced higher volumes in its natural gas pipelines segment last quarter. Transport volumes grew 4 percent year over year, but gas gathering volumes fell 12 percent. Crude oil and condensate pipeline volumes were up 6 percent and total refined products volumes were up 37 percent, compared to the second quarter of 2020.

Kinder Morgan is spending $145 million to expand its Louisiana Pipeline, a project designed to provide 945,000 dekatherms per day (Dth/d) of LNG capacity to serve Train 6 at Cheniere’s Sabine Pass Liquefaction facility in Cameron Parish, Louisiana.