16X increase in US crude exports lifts some intra-US pipeline flows by >3X
April 9, 2024
Key Observations:
From 1975 through 2015, a crude oil export ban prohibited nearly all crude oil exports from the United States. Ten years ago, in January 2014, Canada was the only country permitted to receive U.S. shipments (248 thousand b/d in that month).
Repeal of the ban opened the door for the U.S. shale boom to supply the world and to lower oil prices from where they otherwise most likely would have been, all else equal. In January 2024, the U.S. exported 4.05 million b/d of crude oil to 27 destination countries, according to EIA data.
Less commonly appreciated is what the debottlenecking means for movements of crude oil within the United States. Pipeline flows from the Rockies into the Midcontinent region made a new all-time high at 985 thousand b/d in December 2023. Flows from the Midcontinent to the Gulf Coast now routinely surpass 2 million b/d. These flows are more than 3X higher than a decade ago.
The cash price for WTI crude oil at Cushing, OK (the basis for NYM futures) averaged $94.62 in Jan-14. At that reference price, annualized value of crude shipped from PADD 4 to PADD 2 was $8.3 Bn. Cash WTI averaged $74.15 in Jan-24. Annualized value of P4–>P2 flows now: $25.3 Bn.
Beneficial for: OKE, PAA (fresh 52-week high)
Source: EIA, Blacklight Research. Note: region names used in the chart above are more formally four of the five Petroleum Administration for Defense Districts (PADDs). "Midcontinent" refers to PADD 2. "Gulf Coast" refers to PADD 3. "Rockies" refers to PADD 4. "West Coast" refers to PADD5. The omitted PADD 1 is "East Coast". Movements of crude oil into PADD 1 from other PADDs have declined over the past decade. In Jan-14, PADD 1 took 294 thousand b/d from PADD 2 and 71 thousand b/d from PADD 3. Ten years later, in Jan-24, these flows were 33 thousand b/d and 35 thousand b/d, respectively.
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