Texas oil exports hit milestone, exceed imports in ongoing boom
Jobs, rigs, investment in state soar as crude flows to foreign markets
Oil exports from the Texas Gulf Coast eclipsed imports for the first time earlier this year as growing U.S. oil production pours into foreign markets and the shale revolution continues to reshape the global energy industry.
The milestone, reached in April and expanded in May, is another reminder of how quickly the flood of oil from the Permian Basin in West Texas and other shale fields has shifted the balance of trade and the region’s role in the world economy. For decades, the Gulf Coast was a net importer of crude oil, pouring money into the accounts of foreign oil producers in the Middle East, Latin America and other regions.
Today, with U.S. exports recently hitting a record of 2 million barrels a day, nearly 3 of every 4 of those barrels — 1.4 million a day — move through Texas Gulf ports, the U.S. Energy Department reported Monday. In May, the most recent data available, the region exported nearly 500,000 more barrels of crude each day than it imported, bringing into the region billions of dollars that are driving new investment, creating jobs and helping to make Texas one of the nation’s fastest growing economies.
Over the past year, both Texas and the Houston area have added jobs at
twice the rate of the nation as a whole, according tothe U.S. Labor Department.
“The economy would not be as strong as it is if it weren’t for the fact that we were exporting crude now,” said Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, a business association. “That gives us the opportunity to sell to a much bigger market. which means there’s opportunity for us to drill more, to produce more. It also means we’re building more oil rigs, we’re building more equipment, we’re employing more people.”
Crude exports initially grew slowly after Congress lifted a 40year ban — dating to the Arab oil embargo of the 1970s — at the end of 2015, when crude prices were plunging toward their bottom of $26 a barrel in early 2016. Over the past year, as both prices and production have increased, U.S. exports have accelerated, nearly doubling between May 2017 and May 2018, according to the Energy Department.
Exports have been crucial to the growth of U.S. production, which has surpassed Saudi Arabia’s and is closing in on that of the world’s leading producer, Russia, which pumps just over 11 million barrels a day. Without access to global markets, analysts said, U..S. drilling would have proceeded much more slowly, in large part because domestic markets for the lighter grades of crude produced from shale formations are limited.
Gulf Coast refineries, which account for more than 40 percent of the nation’s refining capacity, are primarily set up to process heavier grades of crude from the Middle East and Latin America. While some refiners are processing lighter grades from the Permian Basin and elsewhere, analysts said U.S. production exceeds their ability to consume domestic oil.
“For producers to continue growing production, their only option is to push that crude out into the global market,” said John Coleman, senior research analyst for North American crude markets at the energy consultancy Wood Mackenzie. “If you’re a U.S. shale producer the story for you is an export story almost exclusively.”
The Permian Basin accounts for nearly one-third of U.S. production and companies are investing billions of dollars in pipelines, storage and export terminals to move that oil from West Texas to overseas markets, such as Europe, where refiners are better set up to process U.S. crude, and Asia, where rapidly growing economies and middle classes are driving demand for gasoline. China, Italy and the United Kingdom are among the top markets for oil exported from the Texas Gulf Coast.
The Energy Department credited rising share of exports moving through the Texas Gulf Coast to those investments. For much of the past year, crude shipped through the Houston-Galveston port district — which stretches from Corpus Christi to Beaumont — accounted for slightly more than half of U.S. crude oil exports. In May, however, the share jumped to 70 percent.
Sean Strawbridge, chief executive of the Port of Corpus Christi, said oil exports through his port averaged about 500,000 barrels a day in 2017, and he expects that to quadruple to 2 million barrels a day by 2023.
The Ports is moving ahead with plans to invest hundreds of millions of dollars to dredge the ship channel. It also has plans to build an export terminal on Harbor Island, just a few miles from the Gulf of Mexico, that could host some of the world’s largest oil tankers, called Very Large Crude Carriers, which can hold up to 2 million barrels of oil.
Two companies are proposing offshore export terminals to accommodate large tankers. In July, the Houston energy company Enterprise Products Partners said it would build a terminal in the Gulf of Mexico south of Galveston, a project that analysts estimated would cost $1 billion ton $2 billion. In August, the global commodities trading firm Trafigura Group said it planned to build a similar project off the coast from Corpus Christi.