Press Coverage

54 Spring 2019 higher production rates can be achieved per well. As a point of reference, according to the US Energy Information Administration (EIA), in 2017 only 1% of vertical wells produced at least 100 bpd, while an estimated 30% of horizontal wells produced at least 100 bpd. 2 While independent producers now have the ability to access the largest proven reserves on record, the US is simultaneously at the highest crude oil production levels in its history. In November 2017, monthly US crude oil production exceeded 10 million bpd, setting the highest monthly level of crude oil production in US history. 2 Furthermore, the EIA estimates US crude oil production for 2018 at 10.9 million bpd, and projects 2019 production at 12.1 million bpd, demonstrating a growing trend. 2 Notably, in September 2018, the EIA announced that the US became the largest global crude oil producer (Figure 1). 2 Exports: a change in policy Accompanying these factors is a recent change in legislation on US crude oil exports. In December 2015, the US enacted legislation authorising the export of US crude oil without a license, which drove up exports as expected. As a reference point, from 2000 to 2015, US crude exports averaged approximately 86 000 bpd with a range of approximately 2000 – 600 000 bpd. 2 Since 2015, US crude exports averaged approximately 1.1 million bpd with a range of approximately 450 000 – 2.2 million bpd. 2 This drastic rise can be seen in Figure 2. This all comes at an interesting time, as of this writing in early 2019, when there is wide and varied speculation on global crude oil supply and demand market forces. Many expect US crude exports to continue to grow based upon: The assumption that the US will become the balance for global crude oil demand while the agreed upon OPEC and non-OPEC production cuts are honoured. The possibility that non-US production decreases as a result of state instability and possible sanctions. In fact, the EIA projects the US to be a net energy exporter by 2022. 2 While this projection accounts for all energy, crude is a major contributor, and this would be a significant swing. In November 2018, the EIA estimated the 4-week average for US crude oil imports and exports at approximately 7.6 million bpd and 2.2 million bpd, respectively. 2 Challenges arise Of course, there are existing factors that currently limit just how much US crude oil exports can grow. One hindrance is marine vessel size as the US Gulf Coast ports are too shallow to allow very large crude carriers (VLCC) with approximate volume capacities of 2 million bbls to pass when they are fully loaded. Dredging and offshore loading terminals appear to be viable solutions to this restricting facet and smaller Suezmax (approximately 1 million bbls) and Aframax (approximately 750 000 bbls) vessels fill in meanwhile. Expanding supply networks from production sites to export terminals represents another obstacle. Currently, there are major on-going strategic projects to increase the pipeline infrastructure from the Permian region to the US Gulf Coast area. These projects are planned to be operational in the latter half of 2019, which will bring on more supply available for export. Another challenge is environmental compliance. In a petroleum products terminal setting, evaporative hydrocarbon liquids will routinely contact air or inert gas, generating vapour laden with volatile organic compounds (VOC). Specifically, in the case of a crude oil export terminal, ship exhaust, which is used to render the cargo hold of a ship inert, comes into contact with the crude oil, yielding a vapour stream which the terminal facility must process via a vapour control system. Vapour control systems Vapour control systems abate the emission of VOCs to the atmosphere because VOCs, if uncontrolled, through a series of photochemical reactions with nitrogen oxides (NO X ) and energy from the sun, can produce ozone – the primary constituent of smog. Two alternative technologies may be employed for such a purpose: vapour recovery systems and vapour combustion systems. Whereas recovery systems offer a return on investment for the crude oil Figure 1. Comparative monthly crude oil production by leading countries (source: US EIA). 3

• Cover