Category Archives: Oil Export

U.S. To Dominate World Oil Markets

Issue 122 – U.S. Historic Oil Surge

Introduction…The U.S. will be a dominant force in global oil and gas markets for years to come as the shale oil boom becomes the biggest supply surge in history.  This predicted by the International Energy Agency (IEA,)

The report...U.S. production surge to equal Saudi Arabia expansion at its highest point.  The natural gas increases will surpass the former Soviet Union.  This stated in the annual World Energy Outlook.  This boom will turn the U.S. from an oil importer to the biggest exporter of fossil fuels.

“The United States will be the undisputed leader in global oil and gas markets for decades to come,” IEA Executive Director Fatih Birol said Tuesday in an interview with Bloomberg television. “There’s big growth coming from shale oil, and as such there’ll be a big difference between the U.S. and other producers.”

Conclusion...The United States oil and gas production has come a long way since OPEC was able to create the 1973 Oil Embargo.  A sleeping giant was awakened causing the massive development of shale oil and gas fracking.

Source: Grant Smith, “U.S. to Dominate Oil Markets After Biggest Boom in World History,” Bloomberg Markets, 13 November 2017.

Harvey Recovery Faster Due To Changes After Karina

Issue 110 – First Corpus Christi Refinery Online

Introduction...Many changes have been made since the 2005 Hurricane Katrina tore though east Texas and Louisiana where 25% of the nation’s refinery is located.  This was reported on a September teleconference reported by the American Petroleum Institute.

Harvey’s damage…400,000 barrels per day (bpd) of production was offline to refineries and gas processing.  Ports and terminals are mostly open.  That is more important now than after Katrina because the U.S. is a major exporter of crude and oil products.

Pipelines, which are critical are mostly back to capacity including Colonial and Explorer Pipelines.

There has also been fewer electricity outages than during Katrina, an important element of refining.

Improvements…Government response has improved, noted Robert McNally, a fellow at Columba University.

The federal government understands that oil is the life-blood of a modern society.  Restoration of supplies and transportation came quickly after Harvey, McNally said.

In conclusion…“We definitely were better prepared. We appreciated the need to deal with all of the energy aspects that we identified during Katrina, but also communication between state and federal authorities seems to have gone better this time,” said Guy Caruso who previously lead the US Energy Information Agency.

Source: Nick Snow, “Changes since Katrina made post-Harvey recovery better,” Oil and Gas Journal, 8 September 2017.

Why President Trump’s Keystone XL Pipeline So Controversial

Keystone XL Pipeline Route

Introduction…After years of wrangling and what appeared to be a full stop by the Obama Administration in 2015, TransCanada Corp. has finally been granted approval from a U.S. president to build its Keystone XL pipeline across the Canada-United States border.

On Friday, Under Secretary of State for Political Affairs Thomas Shannon Jr. signed the permit. But to make its way across the country, individual states where the pipeline would be constructed still have to sign off. And that’s easier said than done.

“While presidential approval is a major step forward for the pipeline, the battle is far from over as the company still needs to secure some of the land rights with landowners, still needs a permit in Nebraska and is expected to be met with protestor opposition,” said analysts at Tudor, Pickering, Holt & Co. in Houston.

Still, this long-awaited announcement was received with general applause from industry supporters, but it still has some hurdles in its path. The U.S. Chamber of Commerce President and CEO Thomas J. Donohue said the permit is proof that things have changed in Washington

Why is it so controversial…According to the above map, the existing TransCanada pipline starts in Haristy, Alberta and terminates at Patoka, Illinois and Port Author, Texas.  Surely the short add to the Houston port is not a problem.  So, what is the issue being disputed?

The planned 1,179-mile (1,897km) pipeline running from the oil sands of Alberta, Canada, to Steele City, Nebraska, where it would join an existing pipe. It could carry 830,000 barrels of oil each day.

It would mirror an operational pipe, also called Keystone, but would take a more direct route, boosting the flow of oil from Canada.

A section running south from Cushing in Oklahoma to the Gulf opened in January 2014. At the coast there are additional refineries and ports from which the oil can be exported.

The pipeline would be privately financed, with the cost of construction shared between TransCanada, an energy company based in Calgary, Alberta, and other oil shippers. US-produced oil would also be transported by Keystone XL, albeit in smaller quantities than Canadian.

Why do the US and Canada want XL?

Canada already sends 550,000 barrels of oil per day to the US via the existing Keystone Pipeline. The oil fields in Alberta are landlocked and as they are further developed require means of access to international markets. Many of North America’s oil refineries are based in the Gulf Coast, and industry groups on both sides of the border want to benefit.

An increased supply of oil from Canada would mean a decreased dependency on Middle Eastern supplies. According to market principles, increased availability of oil means lower prices for consumers.

President Trump said the project would create 28,000 construction jobs.

Canadian Prime Minister Justin Trudeau has said he will work with the new US leader regarding the pipeline, and that he was “confident that the right decisions” would be taken.

Despite the recent push to find renewable sources of energy and move away from fossil fuels, the amount of oil produced in northern Alberta is projected to double by 2030.

It’s argued by some that by developing the oil sands, fossil fuels will be readily available and the trend toward warming of the atmosphere won’t be curbed.

The fate of the pipeline is therefore held up as symbolic of America’s energy future.

In the here and now, more energy is required to extract oil from the Alberta oil sands than in traditional drilling, and Environment Canada says it has found industry chemicals seeping into ground water and the Athabasca River.

This risk to local communities is one of the reasons many have opposed the project.

The ongoing protest over the Dakota Access Pipeline near Standing Rock Indian Reservation makes for some good theater, but the protesters have as yet been unable to demonstrate that the pipeline actually trespasses on Indian lands or that it will likely lead to groundwater pollution.

Both trespassing and water pollution are serious issues that would rightly open up the owners — in this case, Energy Transfer Partners — to crippling lawsuits.

In North Dakota, however, the pipeline passes through private property and a likelihood of groundwater pollution has not been established.

In summary…Two and one-half million miles of pipelines cross the United States.  There has been oil spills in the past.  It appears that better inspections of these pipelines could increase saftety.  As for the Keystone XL Pipeline, President Trump now passed the decison onto the states where pipeline would be constructed.

References:  Dean Daugherty, “Trump’s Keystone XL Approval Moves Fight to Individual States,” Rigzone.com, 24 Mar 2017; “Keystone XL Pipeline:  Why is it so disputed?”  BBC News, 24 January 2017; Lena Groeger, ” Pipelines Explained: How Safe are America’s 2.5 Million Milles of Pipelines?” ProPublica, 6 December 2016.

Oil Exports Surge To 100-Year High

Barrels of Oil U.S. Oil Exports

U.S. crude oil exports rose to 590,000 barrels per day in April, up 83,000 barrels from March reported by U.S. Census Bureau.  Rigzone reports this is the highest level since 1920.

The largest buyers of the crude:

  • Canada 324,000 bpd
  • Curacao 90,000 bpd
  • Bahamas 36,000 bpd

This comes just six months after the U.S. government lifted restrictions on crude exports.

The tireless lobbers against the ban- Chevron and Exxon Mobil- are the immediate beneficiaries of removing the ban.  The oil trading companies Vitol BV and Trafirua, LTD also benefited.

Israel, China, Germany, France, and Switzerland have also placed to for American energy suppliers.

Conclusion…It seems the United States benefits when other democratic countries can purchase oil and gas that doesn’t support terrorist activities like we saw this week in Orlando.  The shooter swore allegiance to the leader of ISIS, Abu Bakr al-Baghadadi, law enforcement told NBC news.

40-Year Ban To End: House Approves

Oil Tanker Oil Tanker Working

The 40-year ban on exporting American Oil to foreign nations was a response to the October 1973 OPEC oil embargo for the U.S. involvement in the Yom Kippur War.

Our reasons for the ban are long gone now that the U.S. has surplus oil production.  We have lost 35,000 (6.5%) good paying petroleum related jobs from October to April according to the US Bureau of Labor.  Finding more markets for our petroleum production seems like a reasonable idea.

On Friday, October 9, 2015 the House of Representatives, lead by our own Rep. Joe Barton, voted 261-159 with 26 Democrats joining  to lift the 40-year old ban on U.S. exporting oil.

One of the criticism of lifting the ban from the Natural Resources Council was Lifting the Oil Export Ban is a giveaway to the oil industry that would undermine the progress our country is making to use more clean energy and fight climate change.

Really?

The U.S. and Texas in particular has some of the most stringent environmental controls in the world.

I had an opportunity to speak with Ryan Sitton, Texas Railroad Commission a few months ago.  He has a degree in Mechanical Engineer and ran a 500 person oil and gas engineering firm.  Mr. Sitton worked all over the world.  Occording to Mr. Sitton’s experience, many OPEC producers have no concern for the environment.  Environmental destruciton is not a concern.

If we are really concerned about the environment, wouldn’t it be better to produce petroleum in Texas where we have the world’s seond largest EPA?

President Barack Obama is threatening to veto the legislation.  Maybe, but I am proud of our Rep. Joe Barton for bringing a little sanity to Washington, DC.

Posted by Bill Moist

Bill Moist is President and Founder of Professional Equities, Inc, a funder of real estate, oil & gas, and business projects.  He also trains people how to take advantage of funding projects with Crowdfunding.  Bill is a professional lecturer at Graduate Business Schools and professional organizations.  In addtion he is a Texas Real Estate Broker, Certified Public Accountant, Master of Science real estate tax expert, and Investor/Developer with 70+ successful projects.

 Sources: House Votes to end 40-year ban on sending American oil overseas, Star Telegram, by Sean Cockerham, October 9, 2015: US crude oil prices hit lowest since 2009, eliminating thouse of jobs, The Guardian, by Debbie Carlson, August 21, 2015; Commissioner Ryan Sitton, Railroad Commission of Texasrrc.state.TX.US