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Page added on January 20, 2015
Crushing The U.S. Energy Export Dream
Exporting crude oil and natural gas from the United States are among the dumbest energy ideas of all time.
Exporting gas is dumb.
Exporting oil is dumber.
The U.S. imports almost half of the crude oil that we use. We import 7.5 million barrels per day. The chart below shows the EIA prediction that production will slowly fall and imports will rise (AEO 2014) after 2016.
This means that the U.S. will never be self-sufficient in oil. Not even close.
What about the tight oil that is produced from shale? That’s included in the chart and is the whole reason that U.S. production has been growing. But there’s not enough of it to keep production growing for long.
Here is a chart showing the proven tight oil reserves just published last month by the EIA.
Total tight oil reserves are 10 billion barrels (including condensate). The U.S. consumes about 5.5 billion barrels per year, so that’s less than 2 years of supply. Almost all of it is from two plays–the Bakken and Eagle Ford shales. We hear a lot of hype from companies and analysts about the Permian basin but its reserves are only 7% of the Bakken and 8% of the Eagle Ford.
Tight oil comprises about one-third of total U.S. crude oil and condensate reserves. The U.S. is only the 11th largest holder of crude oil reserves (33.4 billion barrels) in the world with only 19% of Canada’s reserves and 12% of Saudi Arabia’s reserves.
In other words, the U.S. is a fairly minor player among the family of major oil-producing nations. For all the fanfare about the U.S. surpassing Saudi Arabia in production of crude oil, we are not even players in reserves. What that means is that we may temporarily pass Saudi Arabia in production because it chooses to restrict full capacity, and U.S. production will fade decades before Saudi Arabia’s production begins to decline.
Let’s put all of this together.
- The U.S. will never be oil self-sufficient and will never import less than about 6 million barrels of oil per day.
- U.S. total production will peak in a few years and imports will increase.
- The U.S. is a relatively minor reserve holder in the world.
How does this picture fit with calls for the U.S. to become an exporter of oil? Very badly. For tight oil producers to become the swing producers of the world? Give me a break.
Perhaps we should send congressional proponents of oil export like Joe Barton (R-TX), Ted Cruz (R-TX) and Lisa Murkowski (R-AK) to “The Shark Tank” TV show to try to sell their great idea to the investors and judges.
22 Comments on "Crushing The U.S. Energy Export Dream"
Makati1 on Tue, 20th Jan 2015 6:52 pm
A lot said in a few words, but true. In today’s world money rules but still bows to Natural Law.
Go Speed Racer. on Tue, 20th Jan 2015 7:00 pm
Dont bother the American sheeple with intelligent facts. They are busy attending NASCAR, church, and Pro football. Besides it was already decided that this is Saudi America, and only dumb stupid Obama is stopping us from exporting oil.
Plantagenet on Tue, 20th Jan 2015 7:27 pm
@Go Speed Racer
You don’t get it. The Obama administration were the folks pushing export of US oil. They’ve taken three steps (1) First the obama administration granted waivers to allows US crude from the Bakken to Canada. Then (2) they granted addition waivers to Pioneer Exploration and other US oil companies to export crude. Then (3) they ruled that adding a can of stabilizer to crude from tight shale oil meant the oil was “processed” and so could be exported. This meant all of the new tight shale oil is now legal to export.
The obama people over the last two years have quietly opened the door for US oil exports.
Plantagenet on Tue, 20th Jan 2015 7:37 pm
Here’s an article about the obama executive order that allows export of US crude produced from tight shale,
Turns out obama wasn’t as “dumb and stupid” as you thought, eh? CHEERS!
http://www.breitbart.com/big-government/2014/06/25/obama-goes-all-in-for-exporting-u-s-crude-oil/
Apneaman on Tue, 20th Jan 2015 7:48 pm
breitbart Plant?
GregT on Tue, 20th Jan 2015 8:37 pm
Plant,
As long as you continue to blame the obama ( capitalization omitted to make a point) administration for every single thing wrong in your view of the world, it is you that doesn’t ‘get it’.
Not even remotely. Try expanding your world view. I know that you have it in you, because every once in a while you actually post something that is highly intelligent.
Plantagenet on Tue, 20th Jan 2015 8:41 pm
@GreT
Your fantasies about blaming the obama administration for every single thing in the world are silly.
This thread is about exporting US crude oil. Most people are too busy twerking to follow the news, but it turns out the obama administration recently authorized export of US crude oil.
Get it now?
GregT on Tue, 20th Jan 2015 8:48 pm
Obama is a proper noun Plant. It is a person’s name. The fact that you continually omit the capitalization of the letter “O” shows that you have an agenda. The Obama administration is not in control of oil exports Plant. The Obama administration has no choice but to do what corporate interests and the bankers tell them to do.
I absolutely get it Plant. You clearly do not.
Plantagenet on Tue, 20th Jan 2015 8:58 pm
@gregt
Your claim that the obama administration “has no choice” but to issue executive orders permitting the export of US crude oil is silly.
Of course they have a choice. No one is twisting obama’s arm or beaming telepathic orders into his head to make him sign the executive orders.
Go Speed Racer. on Tue, 20th Jan 2015 8:59 pm
If Obama had his way, we would all be eating cranberry walnut salad, instead of bacon cheeseburgers. Thank God soon the Republicans will be in power avai , and we can sfart smoking cigarettes in restaurants again.
Go Speed Racer. on Tue, 20th Jan 2015 9:00 pm
If Obama had his way, we would all be eating cranberry walnut salad, instead of bacon cheeseburgers. Thank God soon the Republicans will be in power, and we can start smoking cigarettes in restaurants again.
GregT on Tue, 20th Jan 2015 9:28 pm
“No one is twisting obama’s arm or beaming telepathic orders into his head to make him sign the executive orders.”
Plant, seriously, you are brighter than this, right?
Plantagenet on Tue, 20th Jan 2015 9:38 pm
@Go Speed Racer
How do imagine Obama is controlling what you eat and smoke?
Please explain???
GregT on Tue, 20th Jan 2015 10:17 pm
Plant,
If you honestly do not understand what Speed is trying to get across to you, then I must apologize. What you wrote that I perceived as highly intelligent, probably wasn’t.
Speculawyer on Tue, 20th Jan 2015 10:56 pm
I think exporting oil would be a bad thing for the consumers in the USA. Oil producers would love it because they’d get a better price for their nice light sweet crude.
But . . . go ahead and export it for all I care. Higher prices is probably what they deserve if they fall for such pablum.
GregT on Tue, 20th Jan 2015 11:03 pm
The biggest pablum of all, is the mindset that we are all merely consumers. The planet Earth is not here for human consumption, it is what gives us life.
It is people like you Spec, that are the greatest threat to the future of all humanity, and all life on Earth. Absolutely fucking clueless.
Speculawyer on Wed, 21st Jan 2015 1:04 am
GregT . . . if you want to look like a child and spew petty insults, that is fine. But at least have the courtesy (and balls) to point out what specifically you disagree with instead of just blanket insults. OK? KTHX BYE.
rockman on Wed, 21st Jan 2015 1:07 am
Spec – I’ll pick on you but my post applies to most here. “I think exporting oil would be a bad thing for the consumers in the USA. Oil producers would love it because they’d get a better price for their nice light sweet crude.”
So again: US consumers don’t buy oil… they buy refined products. Thus they don’t compete with foreign oil buyers. US refineries compete for that oil. And the US refineries are beating the crap out of the competition these days. US refiners are buying about 1 BILLION BBLS OF OIL PER YEAR more then what US consumers require. That oil is refined with the products exported overseas.
So I’ll ask the same question I’ve asked before and let’s see if anyone has the balls to set aside this totally irrelevant debate about US oil exports: what is the difference between exporting 1 BILLION BBLS OF OIL PER YEAR and exporting the refined products made from 1 BILLION BBLS OF OIL PER YEAR?
I’ll offer a hint: it isn’t against US gov’t policy to export refinery products. A policy that hasn’t been opposed by an R or D POTUS. A policy that hasn’t been opposed by an R or D controlled Congress.
FYI: in just the last four years, while US consumers dealt with high motor fuel costs, the US has exported over 25 BILLION GALLONS OF FINISHED GASOLINE. And that doesn’t include components used to make finished motor fuels overseas. And diesel fuel, used to transport goods (domestic and imported) to US retailers: in the last 4 years the US has exported 60 BILLION GALLONS.
And the BIG PICTURE(finished petroleum products + natural gas plant liquids + all other liquid hydrocarbons): in the last 4 years the US has exported 170 BILLION GALLONS.
So remind me again why all the discussion has been focused on exporting oil, which US consumers don’t buy, and not on refined products that US consumers do buy.
Perk Earl on Wed, 21st Jan 2015 3:36 am
Did anyone else catch in the state of the union the political inference by Obama that most of our economic problems have been solved, except for making some tax adjustments to give the middle class a boost? No problems mate!
bobinget on Wed, 21st Jan 2015 5:30 pm
Nabbed on net… reliable
Crude Over supply
Met with a Canadian financial player today. They were telling us they buy market analysis from a group that only sells research. Therefore not pushing their book. They did not disclose the group. But the research indicates the market is 600,000 Bopd oversupplied (normal) and will be 2,000,000 BOPD short by June.
These guys are trying to get deals closed that were working on in October and November and not being hard asses on price.
Davy on Wed, 21st Jan 2015 5:44 pm
Bobby, that June number is contingent on demand in my book. There are issues that could pop some bubbles deflating demand by June. Much will depend on how long investors trust the central banks promises. Confidence is shaky and volatility high currently. We saw the SNB already leave investors at the altar. Which central bank is next with a white flag? I am of the opinion that in the next 6 months forecast and predictions are dubious. We are in uncharted waters with the oil sector and the global financial system.
dashster on Wed, 21st Jan 2015 5:55 pm
“The chart below shows the EIA prediction that production will slowly fall and imports will rise (AEO 2014) after 2016.”
It isn’t that much different but I think the chart shows a peak in 2019 and import low in 2019. The reference case for the EIA production graph shows a peak in 2019 (2020 is also very close). The pessimistic case shows a peak in 2016 and their optimistic case keeps going up until 2040 and even has conventional production rising from what it is now.