Houston Chronicle – by Jordan Blum
The Texas Gulf Coast is leading the way as the nation ships record levels of crude oil and petroleum products to foreign markets, including China, which is buying more American oil as its economy expands and middle class grows
The United States is routinely exporting more than 1 million barrels of oil and 6 million barrels of petroleum products a day, the U.S. Energy Department said in report released Wednesday. More than two-thirds of those petroleum exports are leaving Gulf Coast ports.
The surge in exports underscores the growing importance of the Texas Gulf Coast as a global energy hub. In a recent report, the International Energy Agency likened the Gulf to the Strait of Hormuz, the narrow waterway through which much of the oil from the Middle East travels. In aftermath of Hurricane Harvey, which forced the shutdown of refineries and the Port of Houston, the IEA deemed the Texas Gulf Coast too important to fail.
No matter what the Organization of the Petroleum Exporting Countries does to try to offset American oil growth, increasingly efficiently U.S. producers are likely to keep growing their share of the global market, said Ethan Bellamy, an energy analyst at the financial services company Robert W. Baird & Co. Just this week, Continental Resources, an Oklahoma exploration and production company, said it’s piping more than 1 million barrels of Bakken shale oil from North Dakota down to Texas ports to export o China.
“Houston is the world’s energy gateway, and increasingly the flow of oil and refined products is out, not in,” Bellamy said. “The announcement from Continental – Bakken crude flowing to China – tells you all you need to know about U.S. competitiveness.”
China is now the second biggest foreign market, behind Canada, for U.S. oil, according to the Energy Department. China imports 163,000 barrels of American oil a day, the Energy Department said Wednesday.
The vast majority of the crude exports are shipped from Corpus Christi and Houston-area ports. Since Congress lifted the nation’s decades-old ban on oil exports, foreign sales have surged from about 500,000 barrels a day last year up to about 1 million this year. Over the past week, crude exports averaged about 1.8 million barrels a day, just under the record 2 million barrels a day in early October.
A slew of pipeline projects are underway to transport more oil from West Texas’ booming Permian Basin to Houston and Corpus Christi hubs. The volume of U.S. crude exports should rise to 3 million a day by 2025, according projections by the research firm to IHS Markit.
“The vaulting of U.S. exports is a trend which will likely continue for the next several years, ” said Bill Herbert, a senior energy analyst at Piper Jaffray & Co. in Houston.
Aiding oil exports is favorable pricing: West Texas Intermediate, the U.S. benchmark for crude, is trading at about $52 a barrel, about roughly $6 a barrel less than Brent crude, the European benchmark produced in the North Sea.
And more than just oil is booming.
Exports of distillate fuel oil, which is used to make diesel or heating oil, jumped 17 percent in the first six months of the year, compared to the same period in 2016, according to the Energy Department. Also rising are U.S. propane exports to Asia and gasoline shipments to Mexico, which buys about half of all gasoline exported by U.S. refiners. Other energy products, such as ethane, a natural gas liquid
And then there are burgeoning foreign markets for other energy products such as ethane, a natural gas liquid that is a primary feedstock for petrochemicals, and liquefied natural gas. Houston’s Enterprise Products Partners is shipping from the world’s largest ethane export terminal, which opened last year at Morgan’s Point along the Houston Ship Channel, while Houston-based Cheniere Energy is the U.S. pioneer for LNG exports from its Sabine Pass terminal in Louisiana near the Texas state line.
Collin Eaton contributed to this report.