North America To Be Net Exporter Of Oil; North Dakota Preparing To Export Refined Bakken Crude Oil -- December 9, 2014

The Dallas Business Journal is reporting:

Exxon Mobil Corp. predicts that North America will become a net exporter of oil and natural gas by 2020.

Advances in technology mean there's enough crude oil to satisfy demand for another 150 years, according to the study. To get an idea how far technology such as hydraulic fracking and horizontal drilling has come, in 1981, it was estimated that crude oil would run out in 60 years.

More at the link.

Can you imagine that? Back in 1981, it was estimated that crude oil would run out in 60 years. Can you imagine what oil / gasoline would be costing now -- everyone would be driving an EV powered by coal. Wow.

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And How Will This Happen?

Big warming: this post below may have typographical errors in it. It most assuredly will have factual errors in it. Actually, they are not factual errors; I am simply embedding opinions and predictions within "what-looks-like-a-news-article," similar to what The New York Times and The Los Angeles Times is often accused of doing in their front page "news" articles.  If this is important toyou, go to the source.

This is the story -- a huge thanks to a reader for giving me the opportunity to post it.

Reuters is reporting that the state of North Dakota, through its regulatory agency, the North Dakota Industrial Commission (NDIC), working hand-in-glove with the Bakken oil and gas industry (aka Continental Resources), is in the process of assigning crude oil to two markets: the domestic market and the export market. Reuters did not explicitly say that but ... well, see for yourself.

With some exceptions, the US bans domestic oil exports. The US does not ban the export of refined petroleum products, and in fact, the amount of refined petroleum products the US has been exporting over the past year or so has increased dramatically.

Today, December 9, 2014, Reuters has a long article that is available everywhere. It begins:

North Dakota is poised to impose the strictest oil standards in its history on Tuesday, requiring every barrel of crude to be filtered for dangerous types of natural gas in an effort to make crude-by-rail transport safer.

If is interesting that Reuters uses the word "filtered." Bakken crude oil is not going to be "filtered." Beer and scotch are filtered; Bakken oil is not. Bakken oil is going to be "refined" at a temperature of 115 degrees Fahrenheit and then shipped by rail. And then exported.

The Reuters article continues:

Because most of the oil extracted in the United States via hydraulic fracturing, commonly known as "fracking," is transported on rail and because North Dakota is the second-largest oil-producing state after Texas, the new standards will have a ripple effect throughout the nation.

At its core, the standards will require crude extracted from the state's shale formations - more than 1.1 million barrels per day - to be processed through machinery set at mandated temperatures and pressures, which the NDIC believes will remove the most amounts of propane, butane and other volatile natural gas liquids (NGLs) naturally found in oil. 

Some producers do this now; the NDIC aims to make all comply. 

Note that Reuters says most of North Dakota's Bakken oil is shipped by rail; it would have been nice to see the percentage.

The crude oil that has its NGLs stripped at the site ("some producers do this now") is now a "refined petroleum product." There is no US ban on exporting "refined petroleum products." The oil will be run through a miniature "refinery" at a temperature of 115 degrees Fahrenheit located at / near the Bakken well site. That's not "filtering," that's refining.

[The unanswered question: will Bakken oil shipped by pipeline also have to be refined? If the regulators worry that at some point oil that leaves the state in a pipeline could eventually end up in rail tank car, then, yes, I suppose, this applies to all Bakken oil.]

This dovetails nicely with an earlier article that was just linked: "OPEC faces an insurgency, not a price war."