• Sourcing Solutions
  • Services & Membership
  • Help & Community
Buyer Community> Trade Intelligence> knowledge> Amid Domestic Production Boom, Further Declines Seen in US Crude Oil Imports
Source: PIERS PIERS

Amid Domestic Production Boom, Further Declines Seen in US Crude Oil Imports

Published: 20 May 2015 01:05:39 PST

Part 1 of a 3 Part Series on Crude Oil Trade

U.S. energy trade has long been dominated by oil. But the dynamics have changed considerably in recent years as the U.S. shale boom ensues, allowing producers to tap into previously inaccessible reserves of natural gas and oil.

With greater energy independence, the country’s imports of crude oil have markedly declined. Last November, in fact, the White House announced that domestic oil production exceeded imports for the first time in nearly two decades.

And the trend is expected to continue, according to the Energy Information Administration (EIA). The agency predicts that U.S. crude oil production will increase steadily, from 7.5 million barrels per day in 2013 to an estimated 8.5 million barrels per day in 2014.

Meanwhile, imports of foreign crude oil have been steadily falling in recent years. EIA data shows that total imports of crude oil have declined by 23.2% between 2008 and 2013.

According to PIERS data, this trend has taken a significant toll on waterborne imports of crude oil. Between 2010 and 2013 waterborne crude shipments have decreased in volume by 39.2% with the largest year-over-year declines coming in 2013, when imports dropped by 22.9% from 2.19 billion barrels of waterborne crude imports in 2012 to 1.69 billion barrels in 2013. This significant drop is due in part to the steady increase in market share by Canadian crude which is generally not transported via ocean tankers. Over this same period between 2010 and 2013 total U.S. imports of Canadian crude oil have risen 30.3% to over 937 million barrels in 2013.

In addition to producing more of its own oil, the U.S. also is consuming less, due in part to the increased fuel efficiency of many newer automobiles, planes and ships, as well as increased blending of biofuels into gasoline and diesel; and for fuels used in power production, the shift from fuel oils to natural gas is further reducing consumption.

Waterborne-Crude-Oil-Imports

Fracking Fills Greater Share of Reserves

New drilling and production techniques in the U.S. have predictably translated into larger domestic reserves: The EIA recently reported that U.S. reserves increased 4.5 billion barrels to 33.4 billion in 2012, the most since 1976 and the biggest annual gain since 1970. It was the fourth consecutive year of growth.

Much of this increase has resulted from new production techniques like horizontal drilling and hydraulic fracturing, or fracking, that now enable energy companies to access "tight oil," a previously difficult-to-capture oil that is embedded deep inside formations of rock like shale or sandstone. These tight oil reserves have more than doubled to 7.34 billion barrels, or 22 percent of the total, in 2012 from 3.63 billion in 2011, the EIA says.

But even as domestic resources rise, U.S. oil reserves are still just a fraction of those in countries like Venezuela and Saudi Arabia. Venezuela had 297.6 billion barrels as of 2012, while Saudi Arabia had 265.9 billion, according to BP’s Statistical Review of World Energy.

To put it in even greater perspective, worldwide crude oil reserves at the end of 2012 reached 1.6 trillion barrels, BP’s report said. This total accounts for so-called “proved” reserves, which are quantities that geological and engineering information indicates can be recovered in the future from known reservoirs under existing economic and geological conditions.

Who’s Supplying: 3 Countries Dominate U.S. Crude Oil Imports

Overall, net crude oil imports to the U.S. declined by 9.7% percent between 2012 and 2013, down to 7.7 million barrels per day and Business Monitor International predicts an average annual drop of 5.2 percent in crude imports from 2014 to 2018. While the decline is expected to continue, the U.S. still looks to foreign sources for much of its energy needs. We relied on those imports for about 40 percent of the petroleum, including crude oil and petroleum products, consumed in 2012.

Currently, the top three suppliers of crude oil to the U.S. are Canada, Saudi Arabia and Mexico, according to EIA figures. Together, these three countries accounted for 61 percent of total U.S. oil imports in 2013, an increase from the 55 percent share they held in 2012.

This concentration of the top three suppliers is the highest it’s been in four decades, the EIA’s Petroleum Supply Monthly report says.

Why the reliance on these specific countries? First, all three generally produce medium to heavy, sour crude oil that is desirable to U.S. refineries. According to PIERS Data, in 2013 roughly 89 percent of the 309 million barrels of waterborne imports of crude oil from Mexico were classified as a heavy blend. The U.S. can’t make that as abundantly on its own; domestic crude oil production from shale rock formations is typically of the light sweet quality.

US Crude Oil Imports by Crude Type

Also, with the exception of Saudi Arabia, these countries offer the benefit of proximity — with Mexico, in particular, having a short shipping distance for its oil to the large number of refineries along the Gulf Coast.

Using Trade Intelligence to Make Data-Driven Decisions

Over the past year, PIERS has refined our product offering to deliver a customized view of global crude oil and petroleum shipments that provides immediate, actionable intelligence to support strategic decision making for those in the energy industry. PIERS provides the information on international trade that goes beyond aggregate trade statistics to give you a customized view of your market with the producers, suppliers, crude oil blends and APIs that matter to you.

An example of one of our energy dashboards is shown below. For more information about how PIERS can develop customized business intelligence tools for crude oil and other refined petroleum products, visit our website and register to speak to one of our solutions experts.

Share this post:
Related Article
Most Popular
icbu-news010185225120