Every time you think the petroleum supply-demand and import-export scenario for the US might take a breather in its revolutionary change, it throws even more shocking figures at you.
The big monthly Energy Information Administration report that comes out at the end of the month, with data from two months prior, has the advantage this month of also having full-year data for 2012. Here are some of the highlights.
- US net petroleum import dependence has taken the kind of fall you’d expect to see in an economy that is being dragged into a depression, given how steep it has been. But that’s not the case. US import dependence in December dropped to 5.987 million b/d. The last time it was less than 6 million b/d was in early 1991. So the year ended up with monthly net import dependence figures of–starting in July–7.537 million b/d, 7.881, 7.383, 6.883, 6.698 and 5.987. That’s a seismic shift.
- What are the reasons for this? Obviously, yet another post-2008 record monthly production of crude played a part. At 7.03 million b/d, it was the second consecutive month of US crude production more than 7 million b/d. But demand–reported by the EIA as “disposition” — is taking a continuing downward turn. In December, it was 18.13 million b/d. The last time it was less than that was March 1997, at 17.863 million b/d. Full-year disposition averaged 18.555 million b/d, and it is the nadir year in a stretch that has seen disposition decline from 20.779 million b/d in 2005, which is the record. So 2.2 million b/d of demand has disappeared, and that is not all related to a weak economy. Peak oil may be debated, but for now, peak demand clearly seems to be in the US’ rear-view mirror.
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- Gasoline and residual fuel exports were the third highest ever; total distillate exports were the 7th highest ever. All that added up to total product exports of 2.994 million b/d, the second-highest ever. (NGL exports, which have been climbing almost monthly, actually dipped a bit.)
- The oil pouring out of the Bakken is mostly light sweet crude, and it shows in the impact it has on exporters of similar grades. Nigeria in December exported 248,000 b/d of oil to the US. That’s the lowest for a month since early 1986. Angola exported 116,000 b/d. It has fallen from a high of 708,000 b/d in March 2007.
If you want to delve deeply into the numbers, you can find the report here.
And Net imports from Canada hit a new high at 2.708 mbpd. Throw in the 370,000 bpd from Mexico and that only leaves 2.8 mbpd from outside of North America.
So, given the pace over the last two years it looks like in 2015 North America will have more production than it uses. What happens then? If Keystone XL gets built does the Canadian oil get loaded up on ships in Texas and exported? Does Alaskan oil go to Asia? Does the USA permit exports of unfinished product?
I don’t know the answers to all your questions. But what I would say is Alaska crude has been exported to Asia in the past, and the economics really didn’t work. So that’s not likely to happen again. The specter of Canadian oil being exported has long been raised by Keystone XL opponents, but the irony is that the Gulf Coast refiners are actually set up to run heavy crudes like that from the oil sands. However, it is possible then that some light crudes might be exported. The real story here is that the US surge in production is requiring a lot of midstream companies to really scramble about what are the best ways to deal with it. In the long run, the choices are all pretty appealing. It’s better to be dealing with abundance and all that entails rather than dealing with shortages.