When it comes to getting crude oil to market, bottlenecks have always existed. Back in 2013-15, producers and shippers in the Rockies faced a serious lack of takeaway options. Midstreamers saw the problem and the money to be made, and quickly built more crude-by-rail capacity — and, over time, pipeline capacity — to fix things. Recently, major takeaway constraints emerged in the Permian, much to the detriment of netbacks at the wellhead. There was real concern for a few months that some producers might need to shut in production as there wasn’t any way to get incremental barrels out of the basin. Again, traders and midstream operators got savvy, restarted some dormant crude-by-rail options, initiated long-haul trucking out of Midland, and added more pipe capacity. But what if the next big bottleneck isn’t between two land-based trading hubs? What if there’s not enough export capacity at terminals along the Gulf Coast, the gateway to international markets? In today’s blog, we examine recent export and production trends, and discuss what those could mean for export infrastructure and logistics over the next five years.
U.S. crude oil export volumes have grown substantially since the ban on most exports was lifted in December 2015. Figure 1 shows that by 2017 exports averaged about 1.2 MMb/d, and that in 2018 the export pace increased to about 2 MMb/d. So far in 2019, the volumes being shipped abroad have been averaging just over 2.7 MMb/d, with exports hitting an all-time high of 3.6 MMb/d in February (yellow star to upper-right of bar chart). We’re not even halfway through the year and we’ve already had multiple weeks in 2019 when exports topped 3 MMb/d. Loading that much crude onto huge tankers is no easy task.