U.S. Crude Oil Flows Pushing Imports Aside
June 06, 2013
All great floods start with a single drop.
U.S. domestic crude oil output inched ahead of imports last week for the first time since January 1997.
Straight up, the volume involved translates to a rounding error, a mere 32,000 barrels a day of production of 7.3 million barrels a day. That's only a fraction of a second's worth of feed for the nation's refiners.
But the achievement speaks volumes about where the U.S. has come from in the past 16 years and the tidal wave of change coming in the next 18 months alone.
Since January 1997, weekly U.S. crude oil imports averaged near 9.2 million barrels a day, topping domestic output by 3.5 million barrels a day, or more than 60%. Until now. The reset button has been hit.
Output from shale-oil fields in North Dakota and elsewhere, both in and out of the traditional oil patch, is gushing at more than one million barrels a day above a year ago. Hydraulic fracturing, horizontal drilling and other techniques is set to lift output by a further 1.3 million barrels a day by the end of 2014. Output will hit a 28-year high of near 8.6 million barrels a day, say government forecasters at the Energy Information Administration.
That surge will continue to push aside crude oil imports, which fell last week to their lowest level since when Hurricane Ike disrupted Gulf Coast oil operations in September 2008. Imports dropped to a 10-year low, excluding times of storms.
Imports won't vanish, but they'll be boxed into a 20-year low just above six million barrels a day. With rising supplies of high-value, light, sweet crude at home, imports are shifting to lower-quality, lower-cost oils needed at balance refinery-processing slates. So far this year, these grades make up more than half of imports, up from 36% five years ago. U.S. crude will account for 57% of the oil processed by the nation's refiners at the end of next year, hitting a 22-year high, the EIA forecasts.
By the end of 2014, the current tiny trickle will widen to see domestic crude oil output topping imports by nearly 2.5 million barrels a day. A slow shift, 16 years in the making, is set to become a flood in little more than 16 months.
Source: Dow Jones Newswires
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