U.S. Considers Exporting More Oil for First Time Since ’70s

by Jim Efstathiou Jr. & Jim Snyder, Bloomberg, Jun 18, 2013

The U.S. oil boom is moving Congress closer than it has been in more than three decades to easing the ban on exporting crude imposed after the Arab embargo.

 

Advances such as hydraulic fracturing are leading to record production that may outstrip refinery capacity within 18 months to three years, said Benjamin Salisbury, a senior energy policy analyst at FBR Capital Markets Corp. in Arlington, Virginia. Net petroleum imports now account for about 40 percent of demand, down from 60 percent in 2005, according to the U.S. Energy Information Administration, the Energy Department research unit.

Congress has limited oil exports since the 1973-74 Arab oil embargo triggered shortages that pushed up prices and led to long lines at gas stations. An increase in domestic production last year by a record 766,000 barrels a day [please see my remark below - D.R.] is challenging a notion that Americans need foreign oil, while setting up a debate policy makers may be reluctant to begin.

“Americans are unbelievably politically sensitive to oil and more specifically to gasoline prices,” Salisbury said in an interview. “For politicians to do anything, the pain has to come first. You have to see the rig count fall and then and only then can we have a decision about whether we want to export crude.”  [...]

The U.S. sends about 120,000 barrels of crude a day to Canada under a Commerce Department license. Congress allows exports from Alaska’s Cook Inlet and for consumption in Canada, along with sales determined by the president to be in the national interest.

Exports must expand to sustain the boom that increased U.S. production last year by the most since the first commercial well was drilled in 1859, said Robin West, chairman of the oil consulting firm PFC Energy. Output is putting the nation on pace to surpass Saudi Arabia as the world’s largest producer by 2020, according to Energy Department data. [...]

The oil rush, spurred by technology that makes it cheaper and easier to extract oil from rock formations, has boosted U.S. stockpiles of light, sweet crude, which is less costly to process than high-sulfur grades pumped by Saudi Arabia and Venezuela, making it more profitable for export. Landlocked by the ban and limits on transportation, U.S. light oil trades at a discount to the European blend that sets prices for more than half the globe’s oil.

“If you have an opportunity to export the more expensive product and import the cheaper one, why not do it,” John Felmy, chief economist with the Washington-based American Petroleum Institute, said in a telephone interview. “It’s something that we as a country need to take a look at.”

Still, Americans may balk at the idea of sending oil overseas because they’re concerned it may lead to higher gasoline prices, said David Goldwyn, president of Goldwyn Global Strategies LLC, a Washington-based energy consultant. [Read more]

(According to EIA data, U.S. crude oil production, including lease condensate, increased from 5.652 million barrels a day in 2011 to 6.505 million barrels a day in 2012, i.e., an increase of 853,000 barrels a day in just one year - the largest single-year increase in U.S. oil production ever recorded!---please see here - D.R.)

BP: US oil production growth hit record-high in 2012

by Conglin Xu, OGJ, June 12, 2013

The US recorded the largest single-year increase in oil production in 2012, according to the BP Statistical Review of World Energy. The review, released June 12 [2013], was the company’s 62nd annual report.

Backed by increasing production of unconventional oil and gas, the US recorded the highest growth in both oil and natural gas output in 2012, BP said. Meanwhile, coal consumption in the US experienced the largest decline in 2012 as it was displaced by less-expensive natural gas in electric power generation.

According to BP, world nuclear output recorded the largest annual decline in 2012. After 2011’s Fukushima accident, “higher imports of fossil fuels including [LNG] kept the lights on” in Japan. Due to higher natural gas prices in Europe, power generators substituted coal for gas—an opposite course from the US. [...]

World [primary - D.R.] energy consumption also dropped to 1.8% in 2012, down from 2.4% the previous year, BP reported. The decline was attributable to the economic slowdown as well as improved energy consumption efficiency due to high prices. As the major source of demand growth, emerging countries accounted for 56% of global consumption, up from 42% just 20 years ago.

Global oil consumption increased by 890,000 b/d, 0.9% below the historical average. OECD consumption declined by 1.3% (530,000 b/d) and non-OECD consumption grew by 3.3% (1.4 million b/d).

Global oil production climbed by 1.9 million b/d. Despite a decline in Iranian output due to international sanctions, OPEC contributed to about three quarters of the global increase. [Libyan production recovered strongly after the sharp drop in output in 2011, and Saudi Arabia, the UAE, and Qatar all produced at record levels - D.R.]. Non-OPEC production grew by 490,000 b/d [revised figure 440,000 b/d, according to BP data - D.R.] with increases in the US, Canada, Russia, and China.

BP’s review also stated that world natural gas consumption grew by 2.2%, below the historical average of 2.7%. [Read more]

(Please see BP Statistical Review of World Energy June 2013 - D.R.)