Will Texas Ship Crude to California?
In September 2013, Texas produced its highest monthly rate of natural resources on record – pumping 2.7 million barrels of crude per day, the highest average of oil output in over 32 years, according to data from the U.S. Energy Information Administration. With this excess crude, Texas might become a supplier of oil to California if the trade is profitable.
Once an oil exporter, the Golden State now depends on imports for more than 60 percent of its oil supply. About a quarter of California’s imports are from Alaska, with the rest coming from the Middle East and Ecuador, according to the U.S. Energy Information (EIA).
However, because of California’s history as an oil producing and exporting province, its refining industry was originally built to process local crudes. The state’s refineries have evolved from processing California oil to processing a mix of California crudes, Alaska North Slope, Arab heavy and Ecuador Oriente, among others, according to Gregory D. Croft, University of California, Berkeley.
“As the state continues to witness declining domestic production and the Kern County fields lessening, given the technology and the geology, it’s really not viable that California will be a major producer for quite a while,” stated Christopher Guith, vice president for policy at the U.S. Chamber of Commerce’s Institute for 21st Century Energy to Rigzone.
Until now, a U.S. policy, the Jones Act, made domestic shipping more expensive, as California imported oil from the Middle East, Ecuador and Alaska’s North Slope. If a shortage of qualifying ships can be overcome, Texas crude could become affordable on the West Coast as the highest domestic output creates a surplus of light oil while driving prices down.
“It always comes down to economics,” Guith stressed. “Traditionally, Alaska had been the source for a huge chunk of California’s resources, and that’s still the case, but if you look at the economics, it’s significantly cheaper, both from the initial price per barrel, as well as transportation costs, to move Canadian Albertan crude or Texas crude.”
123
View Full Article
WHAT DO YOU THINK?
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.
- Africa's Natural Resources: Focus for Both Oil and Gas Sectors
- Apprenticeships Gain Momentum in Upstream Oil, Gas Sector
- Senate Energy, Natural Resources Committee to Vote on Keystone XL Pipeline
- Canadian Oil Sands Projects Continue to Vie for Skilled Talent
- East Africa Must Tackle Challenges to Become an Export Hub
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension