posted June 06, 2013 12:17 PM            

By David Bird

All great floods start with a single drop.

U.S. domestic crude oil output inched ahead of imports last week for the first time since January 1997.

Straight up, the volume involved translates to a rounding error, a mere 32,000 barrels a day out of production of 7.3 million barrels a day. That’s only a fraction of a second’s worth of feed for the nation’s refineries.

But the achievement speaks volumes about where the U.S. has come from in the past 16 years and the tidal wave of change coming within the next 18 months alone.

Since January 1997, weekly U.S. crude oil imports averaged near 9.2 million barrels a day, topping domestic output by 3.5 million barrels a day, or more than 60%.

Until now. The reset button has been hit.

Output from shale-oil fields in North Dakota and elsewhere, both in and out of the traditional oil patch, is gushing at more than one million barrels a day above a year ago. Hydraulic fracturing, horizontal drilling and other techniques are set to lift output by a further 1.3 million barrels a day by the end of 2014. Output will hit a 28-year high of near 8.6 million barrels a day, say government forecasters at the Energy Information Administration.

That surge will continue to push aside crude oil imports, which fell last week to their lowest level since when Hurricane Ike disrupted Gulf Coast oil operations in September 2008. Imports dropped to a 10-year low, excluding times of storms.

Imports won’t vanish, but they’ll be boxed into a 20-year low just above six million barrels a day. With rising supplies of high-value, light, sweet crude at home, imports are shifting to lower-quality, lower-cost oils needed to balance refinery-processing slates. So far this year, these grades make up more than half of imports, up from 36% five years ago. U.S. crude will account for 57% of the oil processed by the nation’s refiners at the end of next year, hitting a 22-year high, the EIA forecasts.

By the end of 2014, the current tiny trickle will widen to see domestic crude oil output topping imports by nearly 2.5 million barrels a day. A slow shift, 16 years in the making, is set to become a flood in little more than 16 months. http://blogs.wsj.com/moneybeat/2013/06/05/dj-energy-matters-u-s-crude-oil-flows-pushing-imports-aside/

posted June 06, 2013 07:05 PM            

quote:

---

By the end of 2014, the current tiny trickle will widen to see domestic crude oil output topping imports by nearly 2.5 million barrels a day. A slow shift, 16 years in the making, is set to become a flood in little more than 16 months.

---

quote:

---

sweet crude at home, imports are shifting to lower-quality, lower-cost oils needed to balance refinery-processing slates

---

posted June 10, 2013 08:08 AM            

pffttt

posted June 10, 2013 12:44 PM            

Here's a more technical explanation:

Light crude generally contains less sulfur than heavier crudes and is easier to process. As a result, it is normally priced at a premium to heavier crude oils. However, processing large amounts of light low-sulfur crude can unbalance refinery processing units. Refineries on the U.S. Gulf Coast in particular are designed to process heavy crude oils. Catalytic crackers, hydrocrackers, and coking units convert the very heavy compounds in the crude oil into lighter and more valuable products. Processing lighter crude oil could underload the cracking units that handle the heavier components and overload the units that process the lighter components, causing refineries to operate less economically than they would with a more balanced crude slate. To process more light sweet crude, PADD 3 refiners would need to readjust refinery crude runs, revamp refinery equipment to run a higher percent of light crude, or reduce the use of heavy crude upgrading equipment, which may have adverse impacts on operations. Each of these alternatives carries a cost and, as a result, refiners may not be willing to pay as much for light crude (compared to heavy crude), and light crude prices could decline. http://www.cmegroup.com/education/files/ed172-today-in-petroleum-2012-09-27.pdf