Crude Oil Exports are Hitting Record Volumes; Could Exports Over 5.0 MMb/d Become the Norm?

Crude oil exports are hitting record volumes. Geopolitical dislocations, regional capacity constraints, and transport cost aberrations are upending global trade flows. These developments have a direct impact on U.S. export grades, prices, and the utilization of pipelines and terminals. Petroleum product exports have an equally formidable set of challenges. U.S. surpluses of refined products are growing as domestic demand falls and biofuel penetration increases. The impact will translate directly into shifts in flows between PADDs, the repurposing of infrastructure, and more exports from the Gulf Coast. We’ll be exploring these and many more developments at our upcoming conference, xPortCon-Oil 2023, to be held in Houston on June 8, 2023. In this blatantly advertorial blog, we will introduce the major topics to be covered at the conference, who will be participating, and why we believe this will be the most important industry gathering for crude and products markets this year.

Since the ban on exports of U.S. crude oil was lifted in December 2015, export volumes have soared, and for the week ending October 27, 2017, they surpassed 2 million barrels/day (MMb/d) for the first time ever, according to Energy Information Administration (EIA) statistics. And while exports slowed last week, it is clear that there’s more to come. But the pace of export growth depends on many things, including the ability of Gulf Coast infrastructure to receive and store increasing volumes of West Texas Intermediate (WTI), SCOOP/STACK, Bakken and other crudes and load it onto ships — the bigger the ship the better. Fortunately, coastal Texas and Louisiana already had extensive crude-related infrastructure in place when the export ban ended just under two years ago, and elements of that have been repurposed to handle exports. Will it be enough? Today, we begin a new blog series on existing and planned storage facilities and marine terminals targeted to support rising U.S. crude oil exports.

For the U.S. oil patch, exports are the lifeblood of today’s market. U.S. refineries are operating at more than 90% of their rated capacity and using as much domestically produced light-sweet shale oil as their sophisticated equipment will allow. That means that virtually all of the incremental U.S. unconventional light-sweet crude oil production will need to be piped to export terminals along the Gulf Coast, loaded onto tankers, and shipped to refineries overseas. In today’s RBN blog, we discuss what this undeniable link between crude oil exports and production growth means for U.S. E&Ps and midstream companies — and the future of the oil and gas industry.