90 Miles From Tyranny : U.S. Oil and Natural Gas Exports Soar

Friday, January 5, 2018

U.S. Oil and Natural Gas Exports Soar

The United States is becoming a major oil and natural gas exporter. Canada and Mexico are purchasing natural gas shipped by pipeline from the United States and Cheniere Energy is shipping liquefied natural gas (LNG) from its Sabine Pass export terminal to Europe, Asia and South America. Since 2015, when the ban on crude oil exports was lifted by Congress, U.S. oil companies have been exporting crude oil and are continuing to export petroleum products to areas around the world. China has become a regular recipient of U.S. oil and natural gas and in the first ten months of 2017 was the second largest importer of U.S. crude oil. The boom is due to U.S. ingenuity in applying horizontal drilling and hydraulic fracturing to extract oil and natural gas from shale rock, making the United States the largest oil and gas producer in the world and lowering energy prices for consumers.

U.S. Oil Exports

U.S. oil exports totaled $13.5 billion through September 2017; this is already a record high. In 2011, oil was the nation’s 146th-ranked export. Through September 2017, it ranked 15th.1 And through September 2017, the United States sent oil to 31 nations, up from ten countries in 2015 and four in 2011.

Asia is attracted to U.S. crude for a number of reasons: its refineries are configured to process high quality light, sweet crude that the U.S. oil companies produce from shale oil basins; U.S. crude is less expensive as the WTI trades at a discount to other oil benchmarks such as Brent; and cargoes can be bought on a spot basis, providing refiners flexibility to balance the conventional Middle Eastern supplies that are sourced via long-term contracts.2 In contrast to Asian refineries, the U.S. refining system operates with a heavier slate of crude oil.

When OPEC and Russia agreed to cut oil production to balance oil’s supply-demand fundamentals, the Middle East’s oil exports to China fell, encouraging China to diversify its suppliers. In 2017, China became the largest single buyer of U.S. seaborne crude. U.S. light, sweet crude is available for export from multiple U.S. terminals, is shipped in vessels of all sizes, is easy to process, helps to meet tightening product sulfur specifications in China and is priced to be exported. Nine ships carrying 369,000 barrels a day of crude oil left the United States for China in October 2017—a record high.3

In November 2017, 19.7 million barrels of U.S. oil was due to arrive across Asia, equivalent to about 657,000 barrels per day based on vessels that are currently underway, and those that are discharging or have discharged their cargoes. This is over 50 percent more than...Read More HERE

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