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Page added on January 19, 2015
Dumb and Dumber: U.S. Crude Oil Export
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.
(click image to enlarge)
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.
(click image to enlarge)
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.
(click image to enlarge)
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 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.
I’m out.
**See my previous blog “U.S. Advises Oil Companies How to Break The Law” for discussion of the light oil and condensate refining issues, and The Energy Policy and Conservation Act that bans crude oil export.
8 Comments on "Dumb and Dumber: U.S. Crude Oil Export"
Plantagenet on Mon, 19th Jan 2015 6:53 am
The obama administration granted waivers to allow export of US oil. They also changed the devotion of processed oil in such a way as to allow export of tight shale oil.
Dumb and dumber indeed.
rockman on Mon, 19th Jan 2015 6:53 am
They make some good points. But like so many on the issue of US oil exports they have their heads stuck so far up their asses they can’t tell if it’s day or night. LOL.
So to bore folks one more time: US consumers don’t buy oil…they buy refined products. That’s what they compete for with foreign consumers in the market place. And the US exports refined products made from about 3 million bopd. OTOH if the refineries weren’t making a sufficient profit they would have to increase domestic prices…which isn’t a certainty. So without sufficient profit some refineries might shut down. Which could reduce competition and could lead to higher domestic prices. Additionally if refiners stopped importing that 1 BILLION bbls of oil per year they crack and export they’ll lose that market share to foreign refiners. While US consumers don’t need that 1 BILLION bbls of oil/year today they will in the future. How easy it will be for US refiners to recover those imports isn’t predictable.
Dave on Mon, 19th Jan 2015 7:29 am
Plant you and your constant anti-Obama drivel. This guy has done more for renewable energy than any President in history IMHO. The road to renewables is bumpy for sure and the ride somewhat slow… but it’s happening for the good of mankind. Compare that with Reagan yanking the solar panels off the White House. Can we fathom the difference?
paulo1 on Mon, 19th Jan 2015 7:52 am
re: “and U.S. production will fade decades before Saudi Arabia’s production begins to decline.”
Shale production will fade, certainly. However, I read that KSA is pumping flat out with a big water cut of increasingly sour and heavy product. Maybe they’ll hit the finish line about the same time, even though comparing each others products is comparing apples to oranges.
Plantagenet on Mon, 19th Jan 2015 10:30 am
KSA oil production will peak and decline very soon. Ghawar may be peaking now.
Plantagenet on Mon, 19th Jan 2015 10:32 am
@Daver
Ronnie Reagan has absolutely nothing to do with the obama administration efforts to allow export of US oil.
Try to stay on topic, pls
Dave on Mon, 19th Jan 2015 9:41 pm
Plant as usual you don’t seem to get it. If we used a lot less oil, we wouldn’t have to concern ourselves with importing or exporting the stuff. Given the fact that no matter where it comes from we have the dual concerns of depletion or a finite resource and severe climate consequences. That is why renewables are not “off topic” here either during Reagan’s term or Obama’s. Please think before typing, as this is pretty basic stuff.
agramante on Tue, 20th Jan 2015 10:25 am
Much of what Obama does is political. He’s been trying (uselessly) to appease dingamabaggers who want to export, export, export–including the likes of randy Paul who thought we should save Ukraine this year with liquid natural gas. Such is the nature of Obama’s opposition. And Dave–right on. Ray Gun and his men despised the very concept of limits–even supposed knowledgeable people nowadays like Larry Summers don’t accept the idea–so Ronnie fought to undo and destroy every conservation effort underway at the time. He hired people like James Watt to manage the environment (and Alan Greenspan to incompetently manage the economy, but that’s another matter). However, it doesn’t change the fact that allowing exports now is nothing more than a political concession, and very likely a foolish one. Rock points out correctly that consumers like us are interested in refined products, not crude, and that the refining market has gotten even more complex with the addition of the ultra-light and ultra-heavy products coming from shale and sands respectively. But what helps producers maximize their profit isn’t necessarily best for the economic health of this country. The thing about the oil industry–and I depend on it for my livelihood–is that it’s capital-intensive, not labor-intensive. Comparatively few people experience the effects of all this profit. Even a few more value-added industries here–such as refining–as opposed to simply exporting crude, is helpful, even if those refined products are later exported.