DALLAS—The U.S. is poised for multi-decade success as the global energy mix shifts, with supply growth underpinning ethane’s growing role and the country’s status as a net exporter by the mid-2020s, a midstream analyst said.

Greg Haas, director of integrated oil and gas at Stratas Advisors, told attendees at Hart Energy’s recent Midstream Finance conference “we definitely see changing energy around the globe … energy transportation is an evolving sector and we also see increased regulatory risks and intensifying regulatory concerns affecting the industry.”

Haas pointed to California. The state primed for a potentially devastating earthquake is pondering a tectonic shift toward 100% renewable power. for the future. Haas also noted that the U.S. Strategic Petroleum Reserve is prepared to “right-size” itself.

“What we’ve seen in the upstream is great production supply growth,” he said. “Now the question is, what will it be in the future?

Global oil consumption will rise at an annual average of 1.5 million barrels per day (MMbbl/d) in the forecast, Haas said, with the U.S. taking over the top spot among producer countries, but growth in natural gas is an essential factor, as well.

With natural gas, “there’s definitely supply growth in the U.S., which is now kind of the envy of the world; that’s certainly why we have so many LNG facilities and pipelines feeding our near neighbors and also new industry and utility demand.”

Haas noted that refinery utilization is at 100% and was in the high 90s during the summer, a level not seen in about 20 years.

“Refineries, of course, consume crude oil, but they also burn a lot of gas to boil that oil, which is the fundamental part of refining,” he said. “And they also produce propane and/or consume butane and condensates for blending with transportation fuels. So it’s no wonder to us that we have such great utilization today.”

Refinery projects have been announced in the Permian and the Bakken, and the Hovensa facility in the U.S. Virgin Islands is on track for a restart. That area is exempt from Jones Act restrictions on tankers.

When his own career began, the issue was how to safely run refineries at very low levels of utilization.

“It’s been a total change,” he said. “We’ve got expansion, even planned by Exxon at Beaumont and other places around their network. So that’s just thrilling to me, to sit on the sidelines from a vantage at Stratas Advisors to watch them. With these refineries running so high, and advantaged so well with low crude, low fuel and even low feedstock costs, you’re seeing a lot of expansion in exports around the globe for refined products.”

In 2012, Haas attended a presentation in which a professor from the Massachusetts Institute of Technology predicted that “someday,” the U.S. would reach 25% net imports.

“And that someday was predicated upon reducing demand, having higher costs to reduce demand, some inclusion of Canada in the U.S. supply base. But because of what we have done in the shale industry in the oil and gas upstream, we have supplied more, reduced our imports and we have certainly refined and even exported more, all of which drives down our outside reliance on other people’s petroleum. … We’re now in the low teens on a weekly run-rate basis and we think within a couple of years, we’ll be a net petroleum exporter—not even including natural gas, just on the liquids alone.”

Erin Pedigo can be reached at epedigo@hartenergy.com or 713-260-4631.

Comments