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U.S. Crude Oil Exports Could Jump To Almost 4 Million Bpd By 2020

U.S. crude oil exports could increase to 3.9 million bpd by 2020, mostly driven by rising production in the Permian, the Houston Chronicle reported on Tuesday, citing a new report by S&P Global Platts.

U.S. crude oil exports are expected to reach 2.2 million bpd next year, according to the estimates.

The current ship-borne capacity of the United States is some 4.8 million bpd, with Texas accounting for most of it—3.9 million bpd, according to the S&P report quoted by the Houston Chronicle.

According to the latest available EIA monthly data, U.S. crude oil exports hit the 2 million-bpd monthly mark for the first time in May this year, and exports held above 2.1 million bpd in June and July, with record (so far) monthly exports at 2.2 million bpd in June.

Since the United States removed four-decade-long restrictions on crude oil exports at the end of 2015, U.S. exports have increased. Helped by higher oil prices that renewed shale activity, these exports have continued to rise over the past year and a half.

At the same time, production in the Permian has surged, and the EIA estimates it at 3.427 million bpd in September, rising to 3.458 million bpd in October.

However, the Permian production in West Texas and New Mexico has already outpaced pipeline takeaway capacity capable of transporting the crude oil to the Texas Gulf Coast.

Related: “Profit Secrets of the World’s Most Successful Energy Investors”

Midstream operators have planned and continue to announce plans for more oil pipeline projects in the area to ship oil from the Permian to the Gulf Coast. But many of those pipelines will not come on stream before late in 2019 and 2020, creating bottlenecks in the flow of the rising oil production to the Gulf Coast for exports.

Until those constraints are overcome, inventories at Cushing, Oklahoma, could build up, because the route to Cushing is not as constrained as the one to the Gulf Coast, according to Citigroup. Rising inventories at Cushing will put further pressure on the benchmark U.S. oil price, possibly widening its discount to Brent Crude to as much as $15 a barrel—which would be the widest WTI discount to the international benchmark since December 2013, Citigroup’s global head of commodities research Ed Morse says.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh G Salameh on October 09 2018 said:
    According to the 2018 OPEC Annual Statistical Bulletin, the United States produced 9.355 million barrels a day (mbd) in 2017, consumed 19.917 mbd thus necessitating imports of 10.452 mbd. But since the US exported in 2017 some 1.118 mbd, this meant that net US crude oil imports in that year amounted to 9.334 mbd.

    By 2020, projected US consumption and production could reach 20.52 mbd and 11.00 mbd respectively. This will necessitate imports of 9.52 mbd. Consequently, the US could not be expected to export 3.9 mbd of its extra-light tight oil by 2020 without importing an equivalent amount of heavy and medium crudes suitable for use in US refineries.

    Still, an MIT study published in December 2017 reached the conclusion that the US vastly overstates oil production forecasts and that the EIA has been exaggerating the effect of fracking technology on well productivity. According to this study, the EIA’s weekly forecasts could very well be overstating US oil production between 700,000 barrels a day (b/d) and 1 mbd.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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