U. S. to Be Major Oil Exporter? | Russell T. Rudy Energy LLC
According to a recent article in “World Oil”, at least one consulting firm thinks the U. S. could become a major oil exporter if the current crude export ban is lifted. In a report commissioned by the U. S. Energy Information Administration (EIA), and prepared by Turner, Mason & Co., we could be exporting as much as 2.4 million barrels of oil per day (bopd) by 2025. If this were to happen, the U. S. would be the world’s 4’th largest exporter behind Saudi Arabia, Russia and the United Arab Emirates.
The consultants assumed that domestic crude production would increase by 7.2 million bopd from 3013 levels in response to increased prices as a result of export opportunities. Such a production surge would come from shale and deep water Gulf of Mexico projects.
Turner Mason & Co. indicated that they were charged with determining the upper and lower limits of export capacity should the crude oil export ban be lifted, and 2.4 million bopd is the upper limit. However, the EIA has already indicated to congress that the U. S. could export from 1-1.5 million bopd immediately should the embargo be removed.
Consulting firm IHS, and several other analysts, have previously found that lifting the ban would decrease U. S. pump prices by putting pressure on global crude oil markets. However, some refiners contend that removing export restrictions would reduce the incentive to add additional light crude refining capacity here in the U. S. While this might be true to a certain extent, Turner Mason found that even if the ban were lifted, light crude refining capacity would still increase, but just not as much. The current, artificially low, price for light crude provides more impetus for refinery expansion.
The report goes on to say that if the export ban were lifted, “More costly hydroskimming refineries are not built because export crude oil prevents the price of WTI (West Texas Intermediate or light crude) from declining to a level that would support such investment.”
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/5/06/us-seen-joining-biggest-oil-exporters-if-ban-is-lifted .
