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Oil and Gas Roundup — Jan. 8

January 07, 2015
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

U.S. oil exports jump to record as shale production booms

The U.S. exported a record amount of crude oil in November after a five-year run of production growth that has made the country the most oil-independent in 20 years.

Shipments surged 34 percent to average 502,000 barrels a day in November, the most on record dating back to 1920, data from the U.S. Census Bureau and the Energy Information Administration show. The previous peak was 455,000 in March 1957. The U.S. is now the 17th-largest exporter.

The export record was unthinkable just five years ago, when U.S. crude production was still near a nadir after a 25-year decline. Since then, producers using horizontal drilling and hydraulic fracturing in underground shale rock have boosted output by 66 percent. Lawmakers in Washington are trying to end a 40-year-old law that restricts crude exports to just a few markets.

“This is something we never expected to see,” Carl Larry, president of Oil Outlooks & Opinions LLC in Houston, said yesterday by telephone. “You look back at 2008, 2009, domestic production was half what it is now. We’re not just passing a benchmark in exports, this is going to be a trend going forward.”

While exports of all grades of U.S. crude -- light, heavy and condensates from natural gas -- surged in November, those of light oil were largely responsible for the increase. They jumped to 430,739 barrels a day in November from 330,761 barrels the previous month. Light oil has a gravity measurement of at least 25 API. Heavy crude exports increased to 26,128 barrels a day in November from 17,505.

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Strategic Petroleum Reserve needs ‘modernization,' Moniz says

Rapid changes in the location and type of oil production inside the United States require a “modernization” in the way the country stockpiles crude for emergencies, Energy Secretary Ernest Moniz said Wednesday.

More specific recommendations about the Strategic Petroleum Reserve — 691 million barrels of oil stashed in underground salt caverns in Louisiana and Texas — will come when the Obama administration releases the first phase of its quadrennial energy review later this month, Moniz said during a presentation at The Woodrow Wilson International Center for Scholars.

That broad multi-year analysis will focus first on energy infrastructure and is meant to provide a road map for federal energy policy, executive actions and government-sponsored research programs.

Moniz suggested that the current approach to the strategic petroleum reserve — established in 1975 in the wake of the OPEC oil embargo — doesn’t mesh with today’s booming domestic production, and the surge in light, sweet crude being pulled out of wells in North Dakota, West Texas and other parts of the country.

“Our petroleum reserve really needs modernization, certainly in a variety of physical elements and partly because of the changed production profile in the United States,” Moniz said. “The different geography of producing oil and gas has led to a number of distribution issues that we partially uncovered by doing a test sale from the petroleum reserve (last) year.”

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Senators introduce bill to speed natural gas exports

Two senators introduced a bipartisan bill Tuesday to speed up approvals to export liquefied natural gas.

The bill from Sens. John Barrasso (R-Wyo.) and Martin Heinrich (D-N.M.) follows a series of unsuccessful attempts last year to set time limits on the Energy Department’s consideration of export applications.

The senators said their bill would create jobs domestically, reduce the country’s trade deficit and help U.S. allies’ energy security.

“Right now, LNG exports are being stalled by Washington red tape and permitting delays,” Barrasso said in a statement. “Our bipartisan bill fixes this by creating clear deadlines that force Washington to make timely decisions on these critical energy permits.”

Gas exports are severely restricted, and any shipments to countries without free-trade agreements with the U.S. require an Energy Department determination that the exports are within the national interest.

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API report: The state of American energy is remarkable

The American Petroleum Institute recently released its annual report, the State of American Energy. The report leans heavily on government data to highlight the growth and contributions of each sector of the U.S. energy portfolio.

In recent history the United States was largely dependent on foreign nations to supply its energy. Events like the 1973 Oil Embargo serve as harsh reminders of what a predominantly energy dependent scenario looks like.

Today, the situation is quite different. Thanks in large part to shale development, the United States has bolstered its energy security.

The 2015 State of American Energy echoes this finding by relying on figures from the U.S. Energy Information Administration’s (EIA) “September 2014 Monthly Energy Review” (Table 3.1).

The growth in domestic production has also reverberated throughout the economy, contributing over one trillion dollars to U.S. Gross Domestic Product and creating scores of American jobs.

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