Huge Story: Reader Summarizes US Shift -- US To Be A Net Exporter Of Total Liquids -- October 12, 2019

From a reader earlier this week, sent in as a comment. Several good links so I moved the comment up as a stand-alone post.

This is one of those comments from a reader one really has to slow down and go through it, line by line. This is a historic shirt.

Look at this graphic, for example (from one of the links noted by the reader):

I think there are two big points to make regarding that graphic above.

First, the obvious: the US is on its way to becoming a "net exporter" of total liquids. That's what caught my eye, also: that sharp, sharp decline in imports starting around 2005.

Actually there are three big takeaways.

Second, and this one I just noticed. Look how fast the "curve" changed course. The inflection point was around 2007. I doubt anyone saw this coming. In fact, a lot of folks in 2007 - 2009 would have suggested other things going on to explain this, but by 2010 it was impossible to deny what the US shale revolution had brought.

Third, and this is this the biggie. And no one comments on it. Look at US imports from 1985 to 2005. The line was going up at a 45-degree slope and no indication that it was going to change any time soon. Remember, this includes "petroleum products," the stuff that refineries make. From 1985 to 2005, a huge balance of payments issue. All that cash going to the Middle East (and Rotterdam?)

I'm re-posting the above graph with most of the "clutter" removed.

This is a lot of money to leave on the table is Pocahontas et al ban fracking.

Anyway, this is what started all this. From a reader earlier this week:

The US is predicted to become a "net exporter" of total liquids (crude and products) in October, 2019(this month!):

• https://twitter.com/T_Mason_H/status/1181616132815503360

Note 1: this is crude and products, NOT crude and condensate.

People confuse this a lot in the news. We are still a net importer of crude and condensate (and will be unless we add another ~4 MM bpd of national oil production). See below for crude and condensate net imports, history:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRNTUS2&f=M

You can see that we're still net importing more C&C than we were in late 80s or early 70s.

The reason for becoming a net exporter of "crude and products" are twofold: refinery exports of finished products, and exports of NGLs.

First, our refineries make more products than the nation consumes, so we sell excess to export. See, e.g., gasoline "net imports", now almost a negative (i.e. export) million bopd. [As the reader is implying: this is huge.] 

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFNTUS2&f=A

Secondly, we have massive exports of NGLs (which are considered like a product, since they come from a gas plant). See below:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M_EPL2_IMN_NUS-Z00_MBBLD&f=M

The NGL exports are mostly a result of the shale gas explosion, but includes NGLs from rich associated gas from oil plays like the Bakken and Permian.

Particularly dramatic is the situation in propane (an NGL):

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MPANT_NUS-Z00_2&f=M

You can see we've gone from being a net importer prior to 2010 to exports of ~1 MM bpd nowadays. Not shown is the comparison to other countries. But we are now the clear leader in global exports of propane and bigger than the next couple suppliers (Qatar, Saudi Arabia) combined. The joke they tell over there is that we are the real suicide bombers (of the markets). Just dump our products on the export market and crash the prices. 😀

By the way, do folks remember the news reports some years ago (2010?) of a huge propane shortage in the US. Huge, huge challenge for US farmers who depended on propane to dry their harvested products.

Note 2: This is an EIA prediction (Short Term Energy Outlook) of the monthly number (like how they predict the oil monthly numbers). We won't know the actual EIA monthly numbers for October until end of December (two months lag, sorta like NDIC).

Here is the history to July, 2019. You can see the clear trend in crude and products: 

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M

[Note from Oksol: one wonders if the uptick in imports in July, 2019, was due to Hurricane Barry?]

You can see we almost went to net exports in February of 2019. (There is some seasonality because of less driving in winter.)

Note 3: Finally, the above is all based on monthly numbers. There are also weekly numbers (like there are for oil production). The weekly net import numbers are more erratic than monthly, because an individual oil tanker has enough volume to swing the numbers, 2 MM bo for a VLCC.

Also, the data quality for weekly stuff is worse than for monthly. (Not as bad as production disparity of weekly/monthly, but still some similar issues.)

Here are the weekly numbers for total imports crude and products:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wttntus2&f=w

You can see that we already had a week of net exports in OCT already. And had some sporadic weeks of net exports previously (one each, in November, 2018; February, 2019; and, June, 2019).

However, unlike the sporadic weekly numbers to data, EIA STEO is predicting consistent monthly net exports from October, 2019, on.

(To achieve this will be price dependent. EIA are anticipating prices of WTI in the mid 50s. If we do much worse in price, I expect US production to contract, which will hurt exports.)

P.S. For a little more detail on how the net import numbers compile, this page is good:

https://www.eia.gov/dnav/pet/PET_MOVE_NETI_DC_NUS-Z00_MBBLPD_M.htm

You can click on the blue links at the end of each row to look at individual product net imports.