Back to the Bakken
The Far Side: link here.
WTI; $89.00. Up one dollar overnight.
Natural gas; $9.293.
Active rigs: 46.
Friday, August 19, 2022: 12 for the month, 43 for the quarter, 382 for the year
- 38738, conf, Hunt, Clearwater 157-90-26-23H 2,
Thursday, August 18, 2022: 11 for the month, 42 for the quarter, 381 for the year
- 38369, conf, CLR, Fuller 6-2H1,
RBN Energy: growing crude oil export volumes reshape domestic and global markets.
Yesterday’s Weekly Petroleum Status Report from the Energy Information Administration included an eye-popping statistic: 5 million barrels a day of crude oil were exported from the U.S. in the week ended August 12. It’s the highest U.S. export volume ever reported — and by a margin of nearly half a million barrels a day!
But as huge as that top-line number is, and as many headlines as it’s sure to grab, it's not unexpected. Major changes in international crude markets, coupled with tectonic shifts in North American upstream and midstream, have conspired to push U.S. exports higher and higher. In today’s RBN blog, we examine the factors leading up to this point and what it means for crude markets in the U.S. and abroad.
And, again, the type of crude mattres:
Another big slug of crude has come from the U.S. Strategic Petroleum Reserve (SPR). We wrote about the details of the planned release when it was announced in March. As a result, the average net release from the SPR this summer has been 850 Mb/d of mostly medium sour crude hitting the Gulf Coast market (compared to about 70 Mb/d of crude released from the SPR in the summer of 2021).
And crude-oil quality matters here because Gulf Coast refiners are designed to efficiently handle sour crudes like most of what has been released from the SPR and increasingly shipped down from Canada. That’s in contrast to refineries in some parts of the world, where less complex refineries need an increasing proportion of sweet, low-sulfur crude — like what is commonly produced in U.S. shale plays — to meet IMO 2020 standards. What’s more, even for places that have refineries with desulfurization capabilities, high natural gas prices (like in Europe, for example) can make desulfurization uneconomic. Put another way, the quality of the incremental crude either produced here or in Canada or released from the SPR will impact how much gets run in North American refineries and how much will be pushed into overseas export markets.
Of course, the quality of crude available for export, and thus the attractiveness of it in various destination markets, will be at least somewhat (and in many cases very) different for each exporting terminal. Producing basins, and plays within those basins, have differing production profiles. Further, they have differing access to storage with blending capabilities, to pipelines with batching capabilities, to Gulf Coast regions with refining and terminaling options, and to export terminals with loading capabilities. So, which regions and terminals see increased export volumes will depend on which basins see volume growth and which midstreamers win throughput.
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