With a number of U.S. producers slashing their drilling plans for 2020, crude oil production may flatten or even decline somewhat in the oil-focused basins over the next few months. Still, large volumes of crude — somewhere north or south of 3 MMb/d — will need to be exported from Gulf Coast docks for the foreseeable future to keep U.S. supply and demand in relative balance. That raises the questions of whether more export capacity will be needed, and if so, how much and when? The answers to these questions depend in large part on how much crude the existing marine facilities in Texas and Louisiana can actually handle. Today, we begin a series that details the region’s export-related infrastructure and examines its capacity to stage and load export cargoes this year and beyond.
U.S. crude oil exports have been a leading topic of conversation the past few years, and a frequent focus of RBN’s blogs. Since the ban on most exports of U.S. crude was lifted in late 2015, the volumes of mostly light, sweet crude from the Permian and other U.S. shale plays being shipped overseas have taken off –– from ~600 Mb/d in 2016 to ~1.1 MMb/d in 2017, ~2 MMb/d in 2018 and nearly 3 MMb/d in 2019. Volumes averaged north of 3.1 MMb/d in the first two-plus months of this year, and they often spike higher –– for example, nearly 4 MMb/d was sent out the week ended February 28, according to RBN’s Crude Voyager report. While these gains align with our forecast last summer, in which we projected that U.S. crude exports would continue rising to at least 5 MMb/d in 2022 and nearly 6 MMb/d in 2024, that high-growth trajectory now appears unlikely to be maintained due to the recent collapse in oil prices and the resulting cuts in U.S. producers’ 2020 drilling plans. Still, U.S. production has the momentum of a moving train; it will take weeks and even a few months for output — and the anticipated need for additional exports — to come down much from current levels.
In that same blog, we tried to answer a challenging but critically important question, namely, how much crude export capacity do these terminals have? For our calculation, we relied on four major variables: inbound pipeline capacity, on-site storage capacity, pumping capacity, and the sizes of the ships involved. With a mix of research, math and a whole lot of talking to customers, terminal operators and shippers, we came up with our estimate that, as of mid-2019, crude export capacity from Gulf Coast terminals totaled 5.1 MMb/d, including ~2 MMb/d in the Houston area, ~1.3 MMb/d in the Beaumont/Port Arthur (TX) area, ~1.1 MMb/d in Corpus Christi area and ~700 Mb/d in Louisiana. As we said then, the 5.1-MMb/d total capacity estimate represented the amount of crude that could be sent out of Gulf Coast ports on a daily basis last summer if the weather was great, the pipeline batches were all in sync, ship traffic in the channels was all running smoothly, and producers/traders decided to spread their barrels across every available terminal. In other words, real-life results may vary.
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