U.S. Oil Industry Becomes Refiner to the World as Exports Boom
https://www.bloomberg.com/news/articles/2017-03-06/u-s-oil-industry-becomes-refiner-to-the-world-as-exports-boomMarch 5, 2017
...the U.S. refining industry has shifted its game over the last five years, taking advantage of gaps left by struggling refiners in Latin America, Africa and Asia. Along the way, it’s transforming what had long been a largely domestic business into a new global venture.
"U.S. refiners are now the refiners for the world," said Ivan Sandrea, head of Sierra Oil & Gas, which is planning to build infrastructure to import U.S. fuels into Mexico.
U.S. companies last year exported a record 3 million barrels a day of refined products, more than double the 1.3 million barrels a day shipped a decade ago, according to data from the Energy Information Administration. Gasoline led the surge, with exports hitting an all-time high of almost 1 million barrels a day in December, up ten-fold from a decade ago.
The export boom, together with surging domestic shale oil output, has redrawn the global energy map.
The U.S. a decade ago reported annual net imports of crude and refined products of 12.4 million barrels a day. Last year, it received a net 4.8 million barrels a day, the lowest since 1985. In late 2016, the U.S. exported more crude and refined products to Latin America than it imported from the region -- a first.
The industry is embracing the new overseas fuel markets....
Mexico is emblematic of the shifting landscape. The Latin American country relied on U.S. gasoline last year for nearly 50 percent of its total consumption as refineries operated by state-owned oil giant Petroleos Mexicanos (Pemex) malfunctioned. In December, Mexico imported a record high of 1.2 million barrels a day of U.S. fuels, particularly gasoline.
While Mexico is an example of the strong overseas demand for U.S. fuels, it also represents the danger American refiners face longer term. Mexican fuel demand isn’t booming, which means U.S. refiners are merely filling a gap left by domestic inefficiency.
If Mexico’s own refining plants make some recoveries, the U.S. business there could end as quickly as it started.
"You’ve got to be careful about what you describe as demand," said Thomas Olney, an analyst at Facts Global Energy, a consultancy. "In effect it’s just that domestic production has been struggling," he said....
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Although many don't immediately recognize it as such, this is an area of expanding US manufacturing. They take a raw product and produce a finished, higher value product.