Driven by increased production due to the shale revolution, U.S. waterborne crude oil, LNG and NGL exports have shot higher in the last few years, transforming the U.S. energy trade balance to a surplus position.
Tony Chovanec, executive VP of Fundamentals and Commodity Risk Assessment with Enterprise Products Partners, went on to expound on global supply and demand fundamentals as the featured speaker at the recent Greater Houston Port Bureau’s Commerce Club luncheon in Houston.
Enterprise Products Partners is a large midstream company, whose platform consists of NGLs, crude oil, natural gas, petrochemicals and refined products. It is the largest exporter of NGLs in the world.
Increased U.S. exports have coincided with increased global energy demand. Long-term, global fossil fuel usage forecasts by the EIA, OPEC and the International Energy Agency call for growth from 12% to 21% from 2010 to 2050.
As recently as 2010 the U.S. balance of trade for energy was somewhere negative around half a trillion dollars. But in the three years from August 2020 to 2023, U.S. waterborne crude oil and NGL exports shot higher by an average of 40%. This is a direct result of surging production of crude oil, NGLs, dry natural gas and total natural gas in the Permian Basin.
Ninety three percent of crude oil growth in the U.S. is from the Permian Basin, as well as 80% of the growth for NGLs. The Permian Basin accounts for 67% of the growth for total U.S. natural gas and 50% of the growth for dry natural gas, Chovanec said.
"As production moves up, it all has to be, and will be, exported," Chovanec said, who went on to explain what comes with the production of Permian Basin crude oil. "For every incremental million barrels that we bring out of the Permian Basin, it’s got a half million barrels of NGLs and gas in it. And about 50% of those NGLs are ethane, so it’s some very rich gas."
Oil comprises 86% of the total value of produced components, while the remaining 14% is divided between NGLs and natural gas. The value of NGLs is approximately five times higher than that of natural gas.
Exports and production forecasts
U.S. crude oil exports jumped by 660k b/d in August 2023 from one year earlier to 4.03 million b/d, which was up by 37% from August 2020. Crude oil exports between August 2021 and August 2022 rose by 550, b/d, Chovanec said.
Similarly, U.S. waterborne NGL exports have surged by 42.5% since the beginning of 2020, primarily driven by propane, and followed by roughly equivalent quantities of ethane and butane.
Enterprise’s production forecast for 2012 to 2030 calls for U.S. crude oil, NGLs, total natural gas and dry natural gas to dramatically increase — which has already been the case. U.S. crude oil production is forecast to jump by 138% from 2012 to 2030. NGLs are forecast to surge by 216% in the same time period.
"There’s a lot of merging going on in the Permian Basin," Chovanec added. "There are still somewhere around 140 private companies in the Permian Basin that have not been merged with anybody yet, so this trend will continue."
Chovanec said that surplus natural gas led to the U.S. becoming the largest LNG exporter in the world at 14 bcf/d, followed by Qatar at 11 bcf/d. The U.S. has ample resources to support potential buildout from Appalachia, Haynesville, the Rockies, Eagle Ford and other basins, with support from permitting, long-term contracts, and price.
Operational LNG export capacity stands at 13 bcf/d, with another 10.8 bcf/d under construction.
"When the Europeans decided that they were going to do everything they could do to get off Russian energy, the one that saved the day was U.S. LNG," Chovanec said. "And the fact that it was continuing to grow right when they needed it.
"If you’re going to progress in modern civilization, you have to have reliable energy that comes from products that come from oil and gas," Chovanec said. Addressing the many members of the crowd that represent the O&G and petrochemical industries in the Houston area, Chovanec ended his address by saying that hundreds of millions of people around the world now consume U.S. energy for the continued development of their societies.
