Dec. 06–The United States has become a net exporter of petroluem products for the first time in nearly 70 years as the nation shipped record volumes of crude oil to foreign markets — and there’s lots more where that came from.
As OPEC and its allies negotiated production cuts in Vienna, two government reports on Thursday underscored United States emergence as the world’s new energy power, in large part due to the Permian Basin in West Texas. The Energy Department said that oil producers exported a record 3.2 million barrels of crude a day last week — more than double the volume a year ago — while the nation shipped out 211,000 more barrels a day of petroleum products than it imported.
It was the first time petroleum exports exceeded imports since 1949.
The Interior Deparment, meanwhile said the Permian Basin’s Wolfcamp and Bone Spring formations in West Texas and New Mexico hold the most potential oil and gas resources ever assessed. The two formations hold an estimated 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids.
“It’s good news for Texas economically and signals a lot more activity ahead in the Permian,” said Brian Youngberg, an energy analyst with Edward Jones in St. Louis. “With the exports, it’s growth for the whole Gulf Coast.”
The Permian Basin has driven the record oil output in the United States, accounting for nearly one-third, or 3.7 million barrels a day, of the estimated 11.7 million barrels a day produced in the nation, according to the Energy Department. The Permian Basin, with an estimated 493 drilling rigs in operation, accounts for more than half the nations’s active oil rigs.
An older basin, the Permian has become the center of the oil and gas world in recent years through the combination of horizontal drilling techniques and modern hydraulic fracturing, or fracking, technologies. Much of the new activity is in Permian’s western lobe, known as the Delaware Basin, which encompasses the Wolfcamp and Bone Spring formations
Interior’s assessment of those formations is based on undiscovered oil and gas that’s considered technically recoverable based on these modern extraction methods.
The Permian has attracted billions of dollars in investment, not only in drilling operations, but also pipelines. Several new pipelines are planned or under construction with the aim of carrying more Permian crude to the Gulf Coast. Billions more dollars are expected to be invested in export terminals in the Houston and Corpus Christi areas.
About 60 percent of all U.S. petroleum exports are shipped out of Texas ports, according to the Commerce Department. More than $90 billion in petroleum products were exported from Texas through the first 10 months of 2018, up more than 50 percent from the same period in 2017.
The increase of exports is attributed in part to widening price differences between U.S. and foreign crude, analysts said. West Texas Intermediate crude is trading at more than an $8 per barrel discount to Brent crude, the international benchmark.
Record crude oil exports contributed to a decline in U.S. crude stockpiles, which fell last week for the first time in 11 weeks, although they remain above the five-year average, according to the Energy Department.
Crude settled in New York at $51.49 a barrel, down $1.40. Crude prices have plunged by about 30 percent since peaked in early October at more than $76 a barrel.
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