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America’s Energy Balances

A couple of weeks ago I attended a charming annual gathering in Houston: Intellichem’s Latin American Petrochemical Networking Meeting at the Westin Galleria Hotel. There were a few good presentations at the event. One that particularly caught my attention was that of Alfred Luaces, an analyst with Purvin & Gertz, which was recently acquired by IHS.

Here are a few takeaways from the presentation:

1) U.S. natural gas liquids production has risen by 15% since 2008, an increase of 270,000 barrels per day. Judging from the graph Luaces put up, production will increase another 400,000 to 500,000 BPD by 2015. Ethane will grow more than other NGL components like propane.

2) The amount of oil extracted from shale in the U.S. will hit 1 million BPD in by 2015 and 2 million BPD by 2020. (According to the EIA, today’s production, on a reasonably comparable basis that includes condensate and stuff, is about 8 million BPD).

3) Canadian crude production will increase by 700,000 BDP in Western Canada, hitting 3 million BPD by 2015. Here Luaces made a point that is consequential to the XL Pipeline. “We think this will be processed on the Gulf Coast eventually,” he noted. But in the meantime, it will be processed in Midwestern refineries until the capacity of those facilities fill up. This would back out imports from Columbia and Mexico. Much of THAT oil will just go to China. (The XL pipeline issue seems more nuanced than some make it out to be.)

4) The impact of the Gulf of Mexico drilling moratorium—according to a chart—will be about 400,000 BPD this year.

5) Since 2009, 2 million barrels of crude refining capacity has been shut down in North America and the Caribbean, mostly in the Northeast. Another 700,000 in closures may happen this year, the biggest being Sunoco’s Philadelphia refinery.

6) The U.S. is exporting more than 500 million BPD of gasoline, 325,000 BPD of that is to Mexico. The U.S. exported about 200,000 barrels in 2009. (Crack spreads, the margin between oil and refined products, have also been rising.)

7) The U.S. has become a net exporter of LPG (propane). Enterprise, Targa, Conoco/Phillips, and Vitol are planning export terminals or expanding terminals. (This seems to suggest that there may be some propane dehydrogenation opportunities out there.)

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