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Growing Export of US Crude Oil Is Expected to Set Record This Quarter
08/03/2022
On June 27, the analysts at Kpler spread the word that the exports of crude oil from the U.S. Gulf Coast could break a record 3.3 MMbbl/d this quarter as Europe has regard to U.S. crude which can outweigh sanctioned Russian oil.
Due to Washington's decision to release 180 MMbbl of oil from the nation's Strategic Petroleum Reserve, U.S. exports have increased in the last three months, as it has flooded the domestic market.
Exports to Europe are anticipated averaging approximately 1.4 MMbbl/d this quarter, about 30% higher than the year-ago quarter, meanwhile, export to Asia is set to decrease to less than 1 MMbbl/d.
The higher purchases by European buyers have more than offset the decline in flows to Asian countries, which have been buying heavily discounted Russian crude.
In April U.S. crude exports to Europe recorded the second-highest reading on record of 1.53 MMbbl/d. Kpler said this figure illustrated a very strong pull in the immediate after the outbreak of the conflict in Ukraine.
Despite that the U.S. has lost about 1 MMbbl/d of refining capacity since 2020, it also boosted exports thanks to the government’s intervention to back crude supplies which has had consequences in growth in exports.
Some of the energy companies that have the biggest terminals on the U.S. Gulf Coast are Enbridge, Inc., Enterprise Product Operating LLC, and Phillips 66 Partners.
Enbridge operates across North America and beyond - powering industry, empowering society, and safely delivering reliable, affordable sources of energy through our four core businesses such as liquids pipelines, natural gas pipelines, gas distribution and storage, and renewable energy. The company moves about 30% of the crude oil produced in North America, transports nearly 20% of the natural gas consumed in the U.S., and operates North America’s third-largest natural gas utility by consumer count.
Enterprise Product Operating LLC operates an integrated network of natural gas, NGL, crude oil, petrochemical, and refined products midstream infrastructure within the United States. Its operations include pipelines, natural gas processing, liquid and gas storage, NGL fractionation, and export/import terminals. The integrated network of assets is strategically located to serve the major domestic supply basins and product storage hubs as well as international markets.
Phillips 66 Partners has 12 refineries in the United States and Europe process crude oil and other feedstocks and focus on operating excellence, optimization, safety, and increasing margins. The business has a global refining capacity of 2.2 million barrels of crude oil per day. Phillips 66 safely and reliably operates and/or owns more than 22,000 miles of pipeline throughout the United States. Pipelines ensure domestic energy can safely and reliably be delivered to refineries, manufacturers, and ultimately to consumers in various forms. day.
Throughput via the Port of Corpus Christi has grown by more than 150,000 bbl/d and has become 1.86 MMbbl/d. Nevertheless, Port of Houston exports also have been increasing since the third quarter of last year, they remain below pre-pandemic levels.
According to Rystad estimates, the call on U.S. crude could go even higher, if additional restrictions like secondary sanctions are implemented against Russia. Crude exports are going to grow and reach 4 MMbbl/d in the first three months of 2023.
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Crude Pipelines Infrastructure Developing at Enbridge Ingleside Energy Center
The joint project to improve and market a low-carbon hydrogen and ammonia production and export facility was presented on May, 6 by Enbridge Inc. and Humble Midstream LLC. Deployment of the facility is taken under the Enbridge Ingleside Energy Center (EIEC) basis close by Corpus Christi. Being the premier export facility on the U.S. Gulf Coast, the EIEC plays a vital role in world energy security and sustainability. Companies plan to develop a utility-scale efficiently low carbon production facility, able to combine both low-carbon hydrogen and ammonia to meet the growing global and domestic demand. It is expected to sequester up to 95% of CO2 generated in the production process in carbon capture facilities, especially ones owned and operated by Enbridge which makes this process a fully integrated low-carbon solution.
Inconvenient Time for Canadian Crude: US Gulf Coast Is Glutted
Canadian heavy crude, being deeply discounted for several years due to a lack of pipelines, is eventually trading like a “North American” grade, moving in tandem with U.S. sour crudes sold on the GulfCoast thanks to Enbridge’s expansion of its 3 pipeline late last year. Meanwhile, the Gulf is full of sour crude over Washington’s largest-ever release from the Strategic Petroleum Reserve (SPR) that will amount to 180 MMbbl during six months, trying to tame exorbitant fuel prices after the Russian invasion of Ukraine. The market is flooded with millions of barrels of sour crude from storage caverns in Louisiana and Texas. At the world’s biggest heavy crude refining center, U.S. Gulf Coast, heavy grades like Mars and Poseidon are languishing. According to U.S. Energy Information Administration (EIA) data, Canada exports around 4.3 MMbbl/d to the United States, whereas until last year demand to ship crude on export pipelines increased capacity, leaving barrels bottlenecked in Hardisty.
In Wyoming during 2023, the oil and gas industry experienced various trends and developments. Wyoming ranked 8th nationally in both crude oil and natural gas production, significantly contributing to the economy through property and severance taxes. The state had a peak of 27,951 producing wells in 2022, including oil and gas wells, with 33 operating gas plants processing nearly 97% of the state's gas production. Notably, 21 of Wyoming's 23 counties produce oil and/or natural gas, with Converse County leading in crude oil production and Sublette County in natural gas production. U.S. Energy Information Administration (EIA) predicted that crude oil production across the United States would increase to 12.8 million b/d in 2024. Throughout 2023, oil production in Wyoming showed an upward trend, with more than 95 million barrels expected to be produced, an increase of about 3 million barrels from 2022. This rise in oil production was partly attributed to the completion of 110 newly drilled oil wells in the first half of the year, mainly in the Powder River Basin. However, natural gas production faced a decline due to the aging of wells and a low number of new gas wells being completed. Only 18 new gas wells were finished in the first half of 2023, with a noted interest in drilling applications, suggesting potential future developments.
XCL Resources is seeking approval from the Federal Trade Commission (FTC) for its proposed acquisition of Altamont Energy LLC, another Utah-based oil producer. This initiative is backed by XCL's parent entity, EnCap Investments LP, a notable private equity firm. Discussions about purchasing Colorado-based Altamont Energy began in the previous summer, as highlighted in FTC documentation.
Tallgrass Energy has started a new open season for the Pony Express Pipeline, and this is the second time they're doing it in 2024. They're looking for companies that want to move their crude oil from the Williston Basin and are offering special rates as an incentive. This 30-day event kicked off on March 11. To get the full details, companies need to sign a confidentiality agreement with Tallgrass.