Viewpoint: USGC oil exports branch out, output may rise

OREANDA-NEWS. August 11, 2016. US crude exports to destinations other than Canada grew in the first half of 2016 while offshore US Gulf output is expected to continue to increase through the next two quarters.

Canada received only 61.1pc of US crude exports from January through June of this year, according to the latest available data from the US Department of Commerce, down from the 93.38pc received last year. Outgoing US crude was sent to 11 new countries following the December 2015 decision to lift decades-old export restrictions, with the largest portion of that volume rerouted to Venezuela.

Total exports were down, however, to 87.6mn bl of crude from January through June of this year, versus almost 89mn bl in the same period of 2015. In June Canada received 8.4mn bl of crude from the US, down from 9.5mn bl the month before.

Despite the recent decreases in US crude production in reaction tofalling global oil prices, overall oil production and crude in storage remain at historically elevated levels. US crude output averaged 9.07mn b/d in the first five months of the year, falling from 9.5mn b/d during the same period in 2015, but still at least 10pc higher than every other year since 1986, according to the latest data by the US Energy Information Administration (EIA). US crude stocks, including the strategic petroleum reserves (SPR), ended the second quarter at 1.22bn bl, up from 1.16bn bl at the same time in 2015, EIA data shows.

Increasing offshore US Gulf of Mexico production pushed throughputs on the Mars crude system up by 35pc to 398,000 b/d in the second quarter. ExxonMobil's nearby Julia field started up with an initial 34,000 b/d of production in April and could likely ramp up through the rest of the year.

Total US Gulf of Mexico production is expected to continue growing for the remainder of the year despite a bleak outlook for onshore output amid lower oil prices.

The EIA expects Gulf of Mexico production to increase from an average of 1.5mn b/d in 2015 to 1.9mn b/d in the fourth quarter of 2017, according to the agency's latest Short Term Energy Outlook released in July.

Shell is additionally working to complete a debottlenecking project on the key Amberjack crude pipeline by the end of the fourth quarter. The project will increase the takeaway capacity from Green Canyon 19, and also provide additional flow assurance as production in the region increases.

Several large US Gulf projects are expected to bring additional crude production online in the next two years, with Shell's Stones field to start up an anticipated 50,000 b/d by the end of this year.

BP and ExxonMobil's Thunder Horse South expansion is expected to add 42,000 b/d in 2017, and the second phase to Chevron and ExxonMobil's Jack-St Malo project could add to its current 98,000 b/d capacity in the same time frame.

Chevron's 87,000 b/d Stampede and 79,000 b/d Big Foot project are planned for 2018 completion, while Shell-operated Appomattox will start up 2019-20 with 175,000 b/d output.