Lack of refinery capacity for light crude means most oil from West Texas will be exported

Fuel Fix:
Most of the new crude oil produced from West Texas' Permian Basin during the next few years will be shipped out of Gulf Coast ports to growing nations in Asia and other regions, said Kurt Barrow, vice president over oil markets for IHS Markit.

U.S. oil consumption is only rising slightly, while the Permian boom meshes well with Congress lifting the nation's decades-old crude export ban at the end of 2015. Crude exports of 520,000 barrels a day in 2016 already have risen to almost 1 million barrels daily this year.


The oil exports are expected to triple to about 3 million barrels a day by 2025, Barrow said, fed primarily by new Permian production and shipped out of ports in Houston and Corpus Christi.

There are a bevy of pipelines currently proposed to carry crude oil from West Texas to Corpus, potentially turning the area into a world-class oil exporting hub. Likewise, oil pipelines from the Permian to Houston are under construction or being expanded by companies like Houston's Enterprise Products Partners, Plains All American Pipeline and Oklahoma's Magellan Midstream Partners.


The proposed crude pipelines - if most are built - could nearly double the current capacity levels from the Permian Basin from 2016 to 2020, according to a new report from Credit Suisse analysts.

Gulf Coast refineries use some of the Texas oil, but they're built to primarily rely on denser crude from Canada, Latin America and some Middle Eastern nations, and they'll continue to import that oil. As such, most of the new Permian production will travel to other countries via large oil tankers, Barrow said.
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The pipelines make sense and they are expected to grow capacity to five million barrels a day over the next three years.  But something needs to be done about the limited refining capacity for light crude.  It should be a strategic imperative if the US is looking for self-sufficiency.   It would also reduce the money going to prop up the despotic government of Venezuela and put more pressure on them to stop their brutalizing of their own people.

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