Recent decline in Gulf Coast crude oil imports mainly affects lighter grades

Crude oil imports to the U.S. Gulf Coast (PADD 3) which averaged 3.7 million barrels per day (bbl/d) year-to-date through July, the latest month for which data are available, have dropped by more than a third since 2008. The decrease of more than 1.9 million bbl/d from the 2008 average of 5.6 million bbl/d has included almost all imports of light, sweet crude oil, a development that has significant implications for global crude oil price relationships. Nearly half of U.S. refining capacity is along the Gulf Coast, and imports into this region substantially determine overall U.S. crude oil import trends.

Much of the decline in imports can be attributed to the significant increase in U.S. crude production over the last five years. In 2008, U.S. crude oil production averaged 5.0 million bbl/d, the lowest level since 1946. Crude production has increased dramatically since then, due largely to the widespread application of advanced techniques combining horizontal drilling and hydraulic fracturing. Over the first 7 months of 2013, U.S. crude oil production averaged 7.3 million bbl/d. Because much of the new crude oil produced in the United States is light and sweet in quality, barrels of similar grades were the first to be backed out of Gulf Coast imports. In three major port areas in the region — Houston, Texas; Port Arthur, Texas; and New Orleans, Louisiana — combined light sweet imports dropped from a 2008-10 average of nearly 650,000 bbl/d to just over 60,000 bbl/d in 2013 through July (Figure 1).

Without a need to import significant amounts of light, sweet crude oil to the Gulf Coast, prices for grades such as Light Louisiana Sweet (LLS) have recently traded at record discounts to global benchmark Brent crude. When the Gulf Coast needed imports to balance demand for light, sweet crude, LLS traded at a premium to Brent to make it economic to ship barrels to the Gulf Coast. For the three-year period from August 2010 to July 2013, LLS traded at an average premium of $1 per barrel to Brent. However, since the beginning of August, LLS has priced at an average discount of over $3 to Brent, reaching a record discount of $11 per barrel on October 23.

In addition to reduced light-sweet crude oil imports into the Gulf Coast region, New Orleans and Houston are importing significantly less heavy crude. So far in 2013, imports of heavy crude are 405,000 bbl/d and 344,000 bbl/d lower than the 2008-10 average for New Orleans and Houston, respectively. The reversal of the Seaway pipeline (a joint venture of Enterprise and Enbridge) has contributed to the decline in imports. When Seaway started flowing oil south from the Cushing, Oklahoma, hub to the Houston area in May 2012, the pipeline had a capacity of 150,000 bbl/d. Additional pumping stations and other modifications came on line early this year, increasing flows to 400,000 bbl/d. Trade press reports that most of the crude oil now moving on the line is heavy, reducing the need for Houston-area refiners to import heavy crude. Imports of heavy crude into the Port Arthur area have remained relatively unchanged over the last five years, and even increased in 2013 versus 2012. The 2013 increase reflects the expansion of the Motiva refinery in Port Arthur, where an additional 325,000 bbl/d of crude distillation capacity became fully operational in early 2013.

Despite the downward trend in imports to the Gulf Coast region, it is unlikely that domestic crude oil will completely supplant imports. Several refineries in the area are either partially or wholly owned by national oil companies and are likely to continue importing crude from ownership countries. Since 1993, Shell's Deer Park, Texas, refinery (327,000 bbl/d) has operated as a joint venture between Shell and PMI Norteamerica SA, a subsidiary of Petroleos Mexicanos (Pemex), Mexico's national oil company. Petroleos de Venezuela S.A. (PDVSA), the national oil company of Venezuela, purchased Citgo Lake Charles, Louisiana (428,000 bbl/d), and two other U.S. refineries in 1990. And Motiva, a joint venture of Shell Oil Company and Saudi Refining Inc., a wholly owned subsidiary of Saudi Aramco, operates three refineries in the region: Port Arthur, Texas (600,000 bbl/d); Convent, Louisiana (235,000 bbl/d); and Norco, Louisiana (234,000 bbl/d). Together, these facilities import more than 1.1 million bbl/d of heavy crude oil that are unlikely to be replaced by U.S. domestic crude oil.

The U.S. average retail price of regular gasoline decreased seven cents to $3.29 per gallon as of October 28, 2013, 27 cents lower than last year at this time, and the lowest price since December 24, 2012. Prices fell in all regions of the nation, with the largest decrease coming in the Midwest, where the price dropped 12 cents to $3.20 per gallon. The Gulf Coast and Rocky Mountain prices were $3.07 per gallon and $3.37 per gallon, respectively, both six cents lower than last week. On the West Coast the price fell a nickel to $3.61 per gallon, and on the East Coast the price was $3.32 per gallon, a decline of four cents.

The national average diesel fuel price fell two cents to $3.87 per gallon, 16 cents lower than last year at this time. Prices in the East Coast, Midwest, and Gulf Coast regions all fell two cents, to $3.89 per gallon, $3.84 per gallon, and $3.78 per gallon, respectively. The Rocky Mountain and West Coast prices both decreased one cent, to $3.87 per gallon and $4.04 per gallon, respectively.

Total U.S. inventories of propane fell by 1.2 million barrels from last week to end at 64.8 million barrels, and are 9.2 million barrels (12.4 percent) lower than the same period one year ago. Midwest regional inventories declined by 0.9 million barrels and Gulf Coast inventories decreased by 0.4 million barrels. Inventories on the East Coast increased by about 0.2 million barrels, while inventories in the Rocky Mountain/West Coast region were unchanged from the prior week. Propylene non-fuel-use inventories represented 4.7 percent of total propane inventories.

Residential heating oil prices decreased by nearly 4 cents per gallon last week during the period ending October 28, 2013 to reach $3.82 per gallon. This is 19 cents per gallon lower than the price at the same time last year. Wholesale heating oil prices decreased by 9 cents per gallon, arriving at just under $3.02 per gallon.

The average residential propane price increased by 3 cents per gallon last week to reach $2.41 per gallon, 19 cents per gallon higher than the same period last year. Wholesale propane prices increased by almost 4 cents per gallon to reach $1.31 per gallon for the week ending October 28, 2013.

http://mazamascience.com/OilExport/

An excellent way to watch what is going on and how consumption decline is at least 1/2 and probably more of the total reason for import decline, which has largely been insignificant relative to total.

And how the US imports so very much crude AND how the US will never, ever be an exporter — unless there is a huge population decline (maybe 40%) reducing consumption in half.

how consumption decline is at least 1/2 and probably more of the total reason for import decline

Not true. Let us look at the last five years of data (August is the latest available). Click each graph to back to the data source if desired.

Demand (supplied amount)
2013 - 16.976 MMBPD
2008 - 17,418 MMBPD
Down - 0.442 MMBPD

Production
2013 - 7.505 MMBPD
2008 - 5.008 MMBPD
Up - 2.497 MMBPD

Crude Imports
2013 - 8.099 MMBPD
2008 - 10.324 MMBPD
Down - 2.225 MMBPD

And how the US imports so very much crude AND how the US will never, ever be an exporter — unless there is a huge population decline (maybe 40%) reducing consumption in half.
.........
according to the tb pickens and the pickens plan — just shifting over US trucks and busses to natural gas will kill 40% of the demand for oil in the USA.

Right now natural gas stations are being built all over the USA and lot of short haul trucking and bus companies are shifting over to natural gas. 10 years from now the demand for oil will be much lower.

But even natural gas is not what will kill the demand for oil in the USA. That will come from electric cars. But it will be another decade before electric cars take a real bite out of oil demand. Telsa is the harbinger of things to come. Their Tesla S class car is already showing up among the classic car set.

Tesla exists because they can sell fake “credits” to other manufacturers to satisfy the California electric car mandate.
Crony capitalism at its finest.
Without that I doubt they would be around.

http://money.cnn.com/2013/05/21/news/companies/tesla-windfall/

You can thank Sparky and his EPA.

I do not think they helped in any way to promote domestic oil production which has reduced oil imports.
..........
There is a graph above that shows crude oil imports declined from 9 million barrels@ day to 8 million barrels@day in 2011-2012. However, in 2012-2013 imports of crude oil have not declined to 7 million barrel’s a day — (but rather have hovered just below 8 million barrels@day)— even though another graph clearly shows that in the same period US crude oil production increased by 1 million barrels@day.

You have to take in a bigger picture than just crude production and imports.

We now import more crude oil than we need for ourselves and export some of the refined products for a positive trade balance. (on that smaller amount of the total, the total is still negative)

You would have to also include the net refined products import/export amounts to get the total picture.

Be aware that the numbers in the graph include Natural Gas Liquids (but not crude oi). Some data sets at EIA separate out the NGLs but some do not.

I don't like including them when discussing oil and transportation fuel. The NGLs have changed too much lately and can distort where the difference is.

Be aware that the numbers in the graph include Natural Gas Liquids (but not crude oi). Some data sets at EIA separate out the NGLs but some do not.

I don’t like including them when discussing oil and transportation fuel. The NGLs have changed too much lately and can distort where the difference is.
............
When you click to the graph at the eia site — it shows that the USA has gone net positive for net petroleum imports. I’m not getting that unless that has something to do with NGLs as you seem to be alluding. (There has been a huge surge in NGL’s in the last couple years as their prices have remained relatively high unlike natural gas.)

Not all petroleum (including crude oil), only petroleum products.

Click on the following link for more info

http://www.eia.gov/dnav/pet/pet_move_neti_a_EP00_IMN_mbblpd_m.htm

Under the red “U.S. Net Imports by Country” is a pick box for changing what is included in the data. What was included in the graph I had was “products”. But if you look at “petanes plus” and “Liquified Petroleum Gases” you will see they are less than half the net export.

We bring in more crude oil than we need for our own use. We refine it, the export the surplus products we don’t consume. That include heavies (refinery leftovers) like petroleum coke and residual fuel oil. We also export a lot of diesel to countries that use a higher gasoline to diesel rate than we do.

Sorry, I don’t get back this site often.

Something weird, thackney, your original graph of US Field Crude production from the top, vs the one in the reply to me, have different shapes.

I believe the EIA does track C vs C+C and you may have grabbed one in one case and the other in the other case. Pretty big difference is growing between the two because, of course, the Eagleford is producing mostly condensate, which doesn’t yield refinery gain. It’s worth less joules than “proper oil”.

The mazamascience link I posted used BP’s data, and the graphs are pretty clear on it. Max consumption of the BP tracked quantities was about 21 mbpd and it’s 19ish now.

That’s about the amount of rise you see in the production part of their graph. That . . . is 50%.

This is not in any way a dispute. Apples and oranges are ALWAYS around the world of oil. That’s how the energy independence silliness got started.

ckilmer, 745 watts/horsepower. It all starts and ends there. You can look up the number of watts equating to the 5.6 million BTUs in a barrel of crude. Good luck finding a battery with that.

“I do not think they helped in any way to promote domestic oil production which has reduced oil imports.”

They have done everything they can to limit increased domestic production.

Between the enviro whackos and denying all drilling permits on federal land our domestic increases are marginal to what they should/could be!!!

Something weird, thackney, your original graph of US Field Crude production from the top, vs the one in the reply to me, have different shapes.

The graph at the top is over a single year span, with a second line for the previous year. The graph in the reply post is for several years.

I believe the EIA does track C vs C+C and you may have grabbed one in one case and the other in the other case.

I do not know what you mean by C & C+C. Both are domestic oil production. Both have values of 7.5 MMBPD in August 2013.

Max consumption of the BP tracked quantities was about 21 mbpd and it’s 19ish now.

That value include Natural Gas Liquids which is running 2~2.5 MMBPD. You can see the breakdown that includes that number and the data I was using at:

http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_m.htm

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