Shale Boom Creates New U.S. Oil Export Hub

Soaring Permian oil production, increased pipeline takeaway capacity, and a port expansion to accommodate larger vessels position the Texas port of Corpus Christi to become the U.S. oil export hub that could see the most volume growth through 2023, analysts at Wood Mackenzie say.

According to John Coleman, Wood Mackenzie’s Senior Analyst North American Crude Oil Markets, Corpus Christi will surpass 1 million bpd of exports by 2020, and those exports could double to 2 million bpd by 2023 as the United States vies to become a major player on the global crude oil market.

U.S. onshore lower 48 output is expected to exceed 11 million bpd by 2023, and the Permian is forecast to account for half of all U.S. onshore oil production by 2023, or some 5 million bpd, according to WoodMac.

As most of the new production will be light sweet and ultra light crudes, and most U.S. refineries are configured to process medium and heavy crude varieties, the U.S. domestic market—without large-scale capital investment—can only absorb around of quarter of the additional 4 million bpd that U.S. oil production that will come online by 2023, leaving the rest for exports, Wood Mackenzie estimates.

And Corpus Christi is expected to ship a large part of this additional U.S. oil.

“We see a big export surge ahead for Corpus Christi,” Coleman told the Houston Chronicle. “There’s going to be a lot of investments to go alongside that,” he added.

In WoodMac’s study about U.S. crude oil exports, Coleman said:

“Not all US light crudes are created equal. Differences in quality suggest a strong appetite for Permian crude in Europe and Asia, where it may receive a premium of ~$0.50/bbl relative to WTI Cushing blend and Eagle Ford crude.”

Meanwhile, the Port of Corpus Christi Authority has a Project Partnership Agreement (PPA) with the U.S. Army Corps of Engineers (USACE) for the deepening and widening of the Corpus Christi Ship Channel to accommodate larger vessels.

Last week, in a testimony before a House Committee on the funding for the port expansion, Sean Strawbridge, CEO of the Port of Corpus Christi Authority, said that Corpus Christi could be handling even more energy exports, as the expansion of the Panama Canal and the increasing availability of supertankers offer an opportunity for United States oil and gas exporters to increase volumes and competitiveness.

“Our customers tell us that larger, deeper draft cargo ships could save them fifty to seventy-five cents per barrel, a major global competitive advantage,” Strawbridge said, adding that prompt completion of the project that has been long delayed will greatly benefit the United States.

Source: Oilprice.com