U.S. Energy Exports: U.S. Becoming a World Player in Crude, LNG and NGL Markets

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Last week marked the first liquefied natural gas (LNG) tanker ship to be loaded and exported from the Sabine Pass LNG liquefaction facility owned and operated by Cheniere Energy Incorporated (NYSE:LNG) (Houston, Texas). At the end of December, the U.S. shipped its first tanker of crude oil overseas alongside the legacy liquefied petroleum gas (LPG) and natural gas liquids (NGL) exports that make their way from American shores. Does this mean that the U.S. is energy independent, no longer buying crude oil from OPEC? No, it does not. However, what this does mean is that a new hydrocarbon energy source has entered the world stage, competing with established sources and allowing consumers more choice in their energy supply. It may also be what helps spur a recovery in the flagging hydrocarbon commodities markets.

The price of oil remains at record lows due to oversupply. The shale gas/oil revolution in the U.S. that has been pumping out oil at numbers reminiscent of the 1970's has run up against the wall of OPEC price fixing and persistent production, causing the price of crude and its related hydrocarbons to drop dramatically since the end of 2014. With domestic refiners able to use only so much of what the U.S. is producing, the most obvious solution has been to open up the market and find new sources of demand. The U.S. can now ship crude oil overseas as a result of the lifting of the crude oil export ban, which was imposed in the 1970's. Producers now have access to foreign markets and those markets have access to competitively priced American hydrocarbons.

While it would be intuitive to think that the U.S. would only ship out crude oil if its own demand for the black gold were met, it is an oversimplification of the industry. The specific chemistry of the crude oil being used as feedstock is every bit as important as the amount being brought in. Most of the crude oil being produced domestically is light and sweet, great for gasoline and petrochemical feedstock, not so great for heavier tars and asphalts. To meet demand for these heavier products, refiners will still need to import these heavier crudes from foreign sources, including Canada. As such, these export announcements are best viewed as America's debut on the world stage, as opposed to any indication of energy independence.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.