The big question about America’s energy boom is not how much it will produce, but how much it can export.
Allowable exports of crude oil and condensates will exceed 1 mb/d gross by early 2015, if not before. Exports to Eastern Canada are marching toward a half a million barrels a day, and we can expect a return to exports out of Alaska, which could grow to a higher, steadier state of above 100,000 b/d.
We can expect that the oil import gap will be totally closed well before the end of the decade, possibly by 2019 if not by 2018, at which time the United States should become a net exporter of crude oil and petroleum products combined. But that doesn’t mean that obstacles have been overcome.
The U.S. government will inevitably need to respond to growing pressures to export crude oil. But the debates in Washington on whether to lift the various bans on exports of crude oil and condensate are misplaced. A set of big debates in Congress or in the Obama administration to quickly settle issues related to changing the legislation on exports is not soon coming. By law, exports of crude oil produced in federal waters or from federal lands are banned, with some notable exceptions like exports from Alaska, exports of heavy oil in California, or exports to Canada. It is unlikely that either of these laws will be changed any time soon.
What is most likely is the unfolding of a piecemeal, ad hoc set of decisions facilitating exports incrementally, with the sum of the increments reaching very high levels. There is unlikely to be a sudden change in the restrictive framework that limits crude oil exports from the United States. But progressive change is highly likely. The special conditions which now allow a significant volume of exports to Canada are undoubtedly being extended to Mexico. Other Free Trade Agreement partners, including especially Chile, Israel, Singapore, and South Korea are likely to petition for similar status.
Meanwhile, exports from Alaska are likely to continue to grow in volume. The re-export of imported crude oil from Canada is also expected to grow significantly, soon to 200,000 b/d and later to perhaps twice that level.
All of these details matter because they are shaping the emergence of North America as an energy superpower that is poised to usher in disruptive changes to global oil markets, trade, and investment. And how this process unfolds is sure to create new winners and losers as it remakes the global energy landscape.
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