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US oil imports from OPEC down 60%

Hydrocarbon Engineering,

According to the Institute for Energy Research (IER), US oil imports were at one of their highest monthly levels in 2008. Since the, the hydraulic fracturing boom has increase US oil production, making the nation less vulnerable to overseas oil supplies. US oil imports from OPEC were down almost 60% in October 2014 from a monthly high in January 2008.

Due to Canada’s vast oil reserves, Canadian oil imports have also increased. They are at one of their highest levels, totaling 3.5 million bpd in October 2014 – 0.8 million bpd higher than imports from OPEC – based on the most recent data from US EIA. Clearly, if the US continues to need oil importers – which forecaster expect – it is much better to import from a friendly northern neighbour than from overseas.

President Obama is apparently not seeing this trade off, as he intends to veto any bill from Congress approving the northern route of the Keystone XL pipeline, IER highlights. If approved now, the Keystone pipeline would be able to bring 830 000 bpd of oil from Canada to the US in just a few years, when US consumers will most likely see oil prices going up. IER is expecting oil price to average US$71/bbl in 2016, up from a forecast of US$55 in 2015.

US oil production

Forecasters are expecting US oil production to continue to climb, reaching 9.5 million bpd in 2016 – 0.8 million bpd higher than expected 2014 production. While that growth in oil production is not as fast as the nation has seen in the past 3 years, it is still a major increase given the slack in oil prices that have fallen 60% since June of last year and continue to tumble. This phenomenal growth in oil production has been due to hydraulic fracturing coupled with horizontal drilling technology.

The hydraulic fracturing process has come under attack from environmentalists who say that it contaminates groundwater and harms air quality. However, studies by the US EPA and the Department of Energy (DOE) have shown no evidence linking the process to groundwater contamination. The drilling of natural gas and oil wells is not always a perfect process, and from time to time, over the decades, there have been problems with well casings. Yet there has not been a single problem with hydraulic fracturing. Both the EPA and DOE have found hydraulic fracturing to be environmentally safe.

The US shale oil explosion has resulted in a collapse in oil prices, and consequently, a huge decline in gasoline pries, which are now below US$2/gal. in some areas. That has put more money into consumers’ pocketbooks, aiding the US economy.

US oil imports

US net oil imports are now at their lowest level since 2005, and represent just 27% of US petroleum demand – the lowest share since the mid-1980s.

US oil imports from OPEC fell in October 2014 to its lowest level since April 1987. Oil imports from OPEC in October 2014 at 2.6 million bpd were 59% below the 2008 monthly peak of 6.4 million bpd that occurred in January.

Canada remains the US’ largest non-domestic supplier of petroleum, providing 3.5 million bpd in October 2014 based on the latest data from EIA – 0.8 million bpd more the OPEC. Canada has the oil reserves and the where-with-all to continue supplying oil to the US, but infrastructure and political problems remain in the way.

Keystone XL

President Obama has taken six years to determine that he cannot yet make a decision regarding the Keystone XL pipeline, which will be able to move 830 000 bpd of oil to the US and further reduce imports from overseas countries. What’s more, President Obama has indicated that he will veto any bill that Congress send to him approving the Keystone XL pipeline, despite all hurdles to its construction being removed.

President Obama’s environmental issues with Canadian oilsands do not substantiate his numerous delays in making a decision on Keystone XL, the IER holds. Even if the pipeline is never built, Canada’s oil will still be produced and sold. Despite the 60% drop in oil prices, oilsands production has continued in Canada and production is expected to increase by 6 – 7% this year. Canadian oilsands are getting to market by existing pipeline, rail and ship, and Canada is considering new pipelines that would transport the oil to Canada’s east and west coasts.

Adapted from a press release by Emma McAleavey.

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