Dumb and Dumber: U.S. Crude Oil Export

January 19, 2015

NOTE: Images in this archived article have been removed.

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 U.S. 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. 

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This means that the U.S. 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 U.S. 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.

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Total tight oil reserves are 10 billion barrels (including condensate).  The U.S. 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 U.S. 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.  

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In other words, the U.S. is a fairly minor player among the family of major oil-producing nations.  For all the fanfare about the U.S. 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 U.S. production will fade decades before Saudi Arabia’s production begins to decline.

Let’s put all of this together.  

  • The U.S. will never be oil self-sufficient and will never import less than about 6 million barrels of oil per day. 
  • U.S. total production will peak in a few years and imports will increase.  
  • The U.S. is a relatively minor reserve holder in the world.

How does this picture fit with calls for the U.S. 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 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.

I’m out.

**See my previous blog "U.S. Advises Oil Companies How to Break The Law" for discussion of the light oil and condensate refining issues, and The Energy Policy and Conservation Act that bans crude oil export.

Arthur E. Berman

Arthur E. Berman is a petroleum geologist with 45years of oil and gas industry experience.  He is an expert on U.S. shale plays and is currently consulting for several E&P companies and capital groups in the energy sector.

He routinely gives keynote addresses for energy conferences, boards of directors and professional societies.   Berman has published more than 100 articles on oil and gas plays and trends. He has been interviewed about oil and gas topics on CBS, CNBC, CNN, CBC, Platt’s Energy Week, BNN, Bloomberg, Platt’s, The Financial Times, The Wall Street Journal, Rolling Stone and The New York Times. He has more than 36,000 followers on Twitter (@aeberman12).

Berman is an associate editor of the American Association of Petroleum Geologists Bulletin, and was a managing editor and frequent contributor to theoildrum.com. He is a Director of the Association for the Study of Peak Oil, and has served on the boards of directors of The Houston Geological Society and The Society of Independent Professional Earth Scientists.

He worked 20 years for Amoco (now BP) and 25 years as consulting geologist. He has an M.S. (Geology) from the Colorado School of Mines and a B.A. (History) from Amherst College.


Tags: oil exports, oil imports, oil price, Reserves, Shale, tight oil