America, The Energy Exporter

This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.

Bolstering North American energy infrastructure will solidify the United States as an energy exporter by the end of this decade. It is time to start the conversation about changing U.S. laws to allow exporting of American crude oil.   

U.S. Government estimates released this month show the United States producing 25 million barrels of oil equivalent a day of natural gas and oil in 2013 surpassing Russia which produces 22 million barrels a day. The U.S. already took the lead in natural gas production in 2012 passing Russia for the first time since 1982. The U.S. is leading because of development the Bakken in North Dakota and the Eagle Ford in Texas.   

North American energy self-sufficiency is within reach, but only if advancements such as horizontal drilling are matched by improvements to North American energy infrastructure such as its pipeline, railway and seaborne transportation. 

There are two obstacles keeping the U.S. from being a net-exporter of crude oil. First, is a lack of infrastructure, whether pipeline, railway or truck transport, in place to move crude into a position for export. Second, U.S. law limits the type of refined products such as diesel or jet fuel that can be exported. Let’s first look the infrastructure challenge. 

The interstate highway system, built after WWII, became the infrastructure backbone the United States needed to grow into a bustling peacetime economy. Spurred by President Eisenhower, who as an Army Captain in 1919 participated in a sixty-two day cross-country convoy that took eighty military vehicles from Washington, D.C. to San Francisco via the best road the U.S. had, the Lincoln Highway. The trip was not an easy haul. Roads were unpaved turning into dustbowls in the heat or mud pits in the rain. Bridges were weak and there were no signs to mark the way.  

The construction of the Eisenhower Interstate system catapulted the U.S. into a modern economy. Goods and supplies were easily transported from ports to the prairie, and back again. Reviewing today’s energy landscape you find a crude oil glut from a lack of pipeline infrastructure to move Alberta oil sands and Bakken crude to refineries on the Gulf Coast.  

Completing the Keystone pipeline system, which would connect Alberta’s oil sands with Gulf Coast refineries, would import an additional 730,000 barrels of crude oil a day from Canada and 100,000 barrels a day from the Bakken formation in North Dakota. Keystone XL will help displace similar imports from Venezuela but would not be enough to flatten the demand for crude imports.   


View Full Article


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Ted | Dec. 15, 2013
I consider crude oil to be a strategic commodity inexorably linked to our national security and as such, no export of crude should be allowed. One could argue that finished products are exportable under strict controls. Lest we forget how our reliance on, and purchase of middle east oil has financed and funded terrorism throughout the world. No money from rich middle east sheiks equals a huge reduction in terrorism over time. The proper use of our newly found oil would be to stabilize and reduce the price of gasoline and other products made from oil used in this country, giving the population an automatic "raise", taking the pressure off of demands for more hourly wages, and reducing the demand on the government for handouts. This should be seen as a national priority and a service to the country at the highest level. Those with the capabilities to make this happen should forsake their drive for additional profit and make a true philanthropic donation to their country and the security of all its citizens. There will be those who think this idea is too Pollyannish, but I believe there are still true patriots in this country that would love to be involved in a real energy project that addresses some of the real issues we face in this country. What do you think?

Jeffrey J. Brown | Dec. 9, 2013
From the article, "There are two obstacles keeping the U.S. from being a net-exporter of crude oil." I suppose that I would add a third, to-wit, that the US is currently reliant on imports for about half of the crude oil that is processed daily in US refineries. I estimate that the US is going to average an annual crude oil (actually crude + condensate) production rate of about about 7.5 mbpd (million barrels per day) in 2013. In my opinion, the US is going to be lucky to maintain this approximate production rate out to the year 2023. Assuming a 10%/year annual production decline rate from existing wells (this would be the production decline from 2013 to 2014, if no new wells were completed in 2014), which is probably a conservative estimate, the US oil industry would have to replace 100% of current crude oil production--every field from the Gulf of Mexico to Alaska--over the next 10 years, just to maintain the current crude oil rate for 10 years. And Citi Research puts the overall decline rate from existing US natural gas production at about 24%/year, which implies that just to maintain current US natural gas production, the industry has to replace 100% of current US natural gas production in about four years. Meanwhile, we have seen a regional decline in Western Hemisphere net oil exports, from the seven major net oil exporters in the Americas, as their combined net oil exports fell from 5.9 mbpd in 2004 to 5.0 mbpd in 2012 (EIA, total petroleum liquids + other liquids). And we have seen a global post-2005 decline in Global Net Exports of oil, with the developing countries, led by China, consuming an increasing share of a post-2005 declining volume of Global Net Exports of oil.


Our Privacy Pledge

Most Popular Articles

Brent Crude Oil : $56.86/BBL 0.76%
Light Crude Oil : $50.66/BBL 0.21%
Natural Gas : $2.959/MMBtu 0.30%
Updated in last 24 hours