Opinion: Crushing the US energy export dream
22 January 2015
by Arthur E. Berman for Oilprice.com
Exporting crude oil and natural gas from the United States are among the dumbest energy ideas of all time. Exporting gas is dumb. Exporting oil is dumber.
The US imports almost half of the crude oil that we use. We import 7.5 million barrels per day. The chart below shows the EIA prediction that production will slowly fall and imports will rise (AEO 2014) after 2016. This means that the US will never be self-sufficient in oil. Not even close.
What about the tight oil that is produced from shale? That’s included in the chart and is the whole reason that US production has been growing. But there’s not enough of it to keep production growing for long.
Here is a chart showing the proven tight oil reserves just published last month by the EIA.
Total tight oil reserves are 10 billion barrels (including condensate). The US consumes about 5.5 billion barrels per year, so that’s less than 2 years of supply. Almost all of it is from two plays—the Bakken and Eagle Ford shales. We hear a lot of hype from companies and analysts about the Permian basin but its reserves are only 7% of the Bakken and 8% of the Eagle Ford.
Tight oil comprises about one-third of total U.S. crude oil and condensate reserves. The US is only the 11th largest holder of crude oil reserves (33.4 billion barrels) in the world with only 19% of Canada’s reserves and 12% of Saudi Arabia’s reserves.
In other words, the US is a fairly minor player among the family of major oil-producing nations. For all the fanfare about the US surpassing Saudi Arabia in production of crude oil, we are not even players in reserves. What that means is that we may temporarily pass Saudi Arabia in production because it chooses to restrict full capacity, and US production will fade decades before Saudi Arabia’s production begins to decline.
Let’s put all of this together.
The US will never be oil self-sufficient and will never import less than about 6 million barrels of oil per day.
US total production will peak in a few years and imports will increase.
The US is a relatively minor reserve holder in the world.
How does this picture fit with calls for the US to become an exporter of oil? Very badly. For tight oil producers to become the swing producers of the world? Give me a break.
Perhaps we should send congressional proponents of oil export such as Joe Barton (R-TX), Ted Cruz (R-TX) and Lisa Murkowski (R-AK) to “The Shark Tank” TV show to try to sell their great idea to the investors and judges.
It don't look good for gasoline prices over the long term. Batteries do not catch up, hydrogen is misery, biofuels is crap, where are we going ? Better invest in TV's and computers and stay home. Years ago I was playing computer racing online but all the games stopped working and there is none today available, im sure that big online players destroyed these games because they want us to go in websites having a lot of publicity like facebook or youtube, etc.
Posted by: gorr | 22 January 2015 at 09:00 AM
USA may have to produce more oil and consume less of it to avoid huge trade deficits.
Posted by: HarveyD | 22 January 2015 at 09:13 AM
As Robert Rapier noted quite some years ago, if the USA had the same per-capita petroleum consumption as Brazil it would be a net exporter today. The three essential uses for oil are aviation fuel, asphalt for roads and chemical feedstock. The first one is the only major player, and it's a fairly small fraction of total consumption. Electrifying ground transport would eliminate half of US oil consumption right there.
That deals with "could". Should the US export oil? Hell, no.
Posted by: Engineer-Poet | 22 January 2015 at 09:15 AM
Don't worry, gor, Hydrogen is on a trajectory to replace petrol. Demand for the Mirai quadruples sale projection. All Hydrogen-related equipments work as intended and the light is green for commercial production.
Posted by: Roger Pham | 23 January 2015 at 09:55 AM
Folks like the politicians mentioned can make these types of statements and get away with them (actually not just get away with them, but use them to gain political advantage) because the average citizen is incapable of differentiating between political rhetoric and reality. In a rational world these demagogues would be scoffed at as imbeciles, but here in America they are seen as patriots by many confused and ignorant people. We actually could be oil independent though, but it would require significant reduction in consumption rather than increased production. The people that make the money now and who buy politicians such as those mentioned are not interested in that however.
Posted by: Brotherkenny4 | 27 January 2015 at 08:16 AM
What the author forgets, or never knew, is that there's crude oil and there's crude oil. Their crude oil is not the same as ours. Most of the oil in US, especially from the new wells, is light crude. US oil refineries are setup to refine heavy crude coming from the middle east and other places. They can only handle a fraction of the domestic oil mixed with the heavy oil, so the excess IS being exported, especially to the far east. US may not be a net exporter ever, but it is an exporter because of the grades of oil that exist.
Posted by: Floatplane | 27 January 2015 at 03:41 PM