Energy logistics still watchful / ANALYSIS

DEPENDENT on imports in many sectors, the United States is getting its revenge in the energy field through shale oil. Over the course of about ten years the U.S. has cut its net imports by more than half and some of its production is now being sent to China, as well as to many Latin American countries.

In 10 years, the U.S. went from net imports of 13 million barrels per day (data for 2006 taking into account both crude and refined oil production) to five million in 2015. And the story isn’t over yet: American crude exports are growing at an annual rate of over 10%, while imports are increasing at a much more restrained rate and would actually be decreasing if the United States had maintained the ban on selling domestic oil abroad.

At the end of 2015, then-President Barack Obama changed a law that dated back to the first oil shock of the 1970s, which was meant to protect energy supplies. In parallel with the growth of exports, there has, of course, been growth in extraction, which has more than doubled to 11 million barrels per day over the course of the same 10 years.

For a short period, from November 2015 to September 2016, the United States was also the largest producer of oil in the world, a position that did not last long because Saudi Arabia was able to win back the lead quickly.

Last year foreign crude oil sales were at a daily average of 520,000 barrels per day (raw product), versus 465,000 in 2016 and 25,000 in 2006. This growth trend perfectly reflects the recent history of petroleum extracted from shale rock: after having started the extraction on a grand scale with fracking technology at the beginning of this decade, small U.S. oil companies quickly ramped up production. After the serious setback when oil prices collapsed to $25 - fracking is more expensive than the traditional methods of extraction - the state of health of U.S. producers quickly improved with the recent recovery in oil prices.

Despite the many bankruptcies that occurred at the peak of the crisis, companies that extract shale oil showed much greater resistance to low prices per barrel than analysts thought, and in many cases their secret was to drastically reduce the extraction costs, an unanticipated and unwelcome consequence for Saudi Arabia in 2014 at a time when it set off a price war precisely to sink its aggressive competition from shale oil.

Finally, it must be pointed out that shale oil is light oil and that most U.S. refineries are designed to work with aheavier quality oil. This factor means that heavier oil imports are necessary for many refineries, but things are also changing quickly in this field. Recently some plants began to convert to crude oil with a lower sulphur content, while others have decided to mix the two qualities to achieve the right density.

However, shale oil’s incompatibility with many U.S. refineries and China’s thirst for crude oil are great opportunities for the maritime transportation sector, which is benefiting from this situation. And it is very indicative that some U.S. ports are reconverting from oil imports to oil exports. Even better is the state of health of gas sales abroad, which recorded a 30% jump, supported by two consecutive relatively hot winters. The United States should become a net exporter in 2018 due to the entry into operation of new LNG terminals.