Analyst: ‘We Need Exports To Keep Going’

Booming oil and gas production, particularly from the Permian Basin, has made the industry reliant on foreign markets to continue its growth.

Scott Potter of RBN Energy

Scott Potter, managing director at RBN Energy, speaks at the Midstream Texas conference in Midland. (Source: Joseph Markman/Hart Energy)

Shale plays provide an abundance of light oil (40 degree to 50 degree API) but the U.S. refining sector has maxed out on how much it can take. Refineries in this country require 8 million barrels per day (bbl/d) of imported heavy crude to keep running at full tilt. That means 20% of current U.S. crude output and all incremental barrels for at least the near future must be put on ships destined for overseas markets.

“We have to have the pipelines built, we have to have the docks, we have to have the ships because we can’t use it here,” said Scott Potter of RBN Energy.

The case with natural gas isn’t much different. The U.S. produces about 12 billion cubic feet per day (Bcf/d) and exports about half of that to Mexico through pipelines and LNG tankers.

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Joseph Markman

Joseph Markman, senior editor for Hart Energy, covers markets and provides data analysis for all Hart Energy editorial products.