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Shale boom a bonanza for steel: exec

Keywords: Tags  shale reserves, Marathon Petroleum Corp, C. Michael Palmer, Eagle Ford, Permian basin, Bakken region, Corinna Petry

COLORADO SPRINGS, Colo. – The boom in shale oil and gas, and tar sands oil output is good news for America, as well as the U.S. energy and metals sectors, a Marathon Petroleum Corp. executive said May 16 at the joint annual meeting of the American Iron and Steel Institute and Metal Service Center Institute.

The Findlay, Ohio,-based refinery operator expects oil and gas production in the United States and Canada to continue growing and to "change the competitive landscape" as the boom will "back out imports from the Middle East and elsewhere.

"Obviously, new pipelines have to be built," according to C. Michael Palmer, Marathon’s senior vice president of supply, distribution and planning. "This is good news for the petroleum business, good news for the steel business and good news for America."

Long term, North American oil demand will be flat but U.S. production will rise. Canadian imports will increase and other foreign imports will decline, he said.

Between 2012 and 2020, Marathon expects growth from Canadian and U.S. shale plays to total about 4 million barrels per day.

In Canada, production is expected to rise by 1.8 million barrels per day over the next seven years. "The resource is huge: The third largest behind Saudi Arabia and Venezuela," Palmer noted.

In the United States, "there are a lot of (shale plays) available and some are really big," he said, citing the Bakken region in North Dakota. Last year, the Bakken produced 660,000 barrels per day, and is expected to hit 1.5 million barrels per day by 2020.

"The estimated recoverable reserves are 18 million barrels. Its drilling life is not a flash in the pan—it’s estimated at 35 years," Palmer said.

The Eagle Ford play in south Texas produced 450,000 barrels per day last year and should reach 1.2 million barrels per day in 2020, he said. "Estimated recoverable reserves are 14 billion barrels (to last) 35 to 40 years."

The Permian basin, located in west Texas and New Mexico, produced 1.3 million barrels per day last year and should reach 1.7 million barrels per day by 2020 and maybe more, Palmer said, pegging estimated recoverable reserves at "at least 22 billion barrels, or roughly 30 years of drilling life."

Lastly, the Utica play in northeast Ohio is slowly ramping up. Last year it produced three barrels daily, but will get to 120,000 per day by 2020. "Estimated reserves are 3 billion barrels, so we think the drilling life could be 35 to 40 years," he said.

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