The United States exported 7.3 million barrels per day (b/d) of crude oil and petroleum products in the first half of 2018, when exports of crude oil and hydrocarbon gas liquids (HGL) set record monthly highs. Crude oil surpassed HGLs to become the largest U.S. petroleum export, with 1.8 million b/d of exports in the first half of 2018. U.S. exports of crude oil, HGLs, and motor gasoline grew in the first half of 2018 compared with the same period in 2017, while distillate exports decreased 84,000 b/d (Figure 1).
U.S. crude oil exports increased by 787,000 b/d (almost 80%) from the first half of 2017 to the first half of 2018 and set a new monthly record of at 2.2 million b/d in June. Destinations in Asia and Oceania were the largest recipients of U.S. crude oil exports in the first half of 2018, and U.S. crude oil exports to China more than doubled—increasing by 193,000 b/d—from the first half of 2017. U.S. crude oil exports to South Korea and India also increased significantly during this period, up 81,000 b/d and 72,000 b/d, respectively.
Europe was the second-largest market for U.S. crude oil exports, receiving 555,000 b/d in the first half of 2018. U.S. crude oil export volumes to Europe are more equally distributed than in other regions. Italy, the United Kingdom, and the Netherlands, each received more than 120,000 b/d in the first half of 2018. Canada was the only major U.S. crude oil export destination where exports decreased somewhat, down 13,000 b/d in the first half of 2018 compared with the same period in 2017 (Figure 2).
HGLs were the second-largest petroleum export from the United States in the first half of 2018 at 1.6 million b/d. Destinations in Asia and Oceania were also the primary recipients of U.S. HGLs at 618,000 b/d in the first half of 2018. The region’s main importers were Japan, South Korea, China, and India, many of which have expanded petrochemical facilities that import U.S. HGLs as a feedstock. The second-largest regional destinations for U.S. HGL exports in the first half of 2018 were Canada and Mexico in North America, which received a combined 453,000 b/d in the first half of 2018 (Figure 3). U.S. HGL exports also set a new monthly record in the first half of 2018 at 1.7 million b/d in May 2018.
In the first half of 2018, the United States exported 1.3 million b/d of distillate, primarily to destinations in Central and South America, with Brazil and Chile as the two largest destinations, receiving 131,000 b/d and 114,000 b/d, respectively. The decline in U.S. distillate exports in the first half of 2018 compared with the first half of 2017 is mostly the result of lower exports to a number of destinations in Central and South America and in Europe. However, U.S. distillate exports are typically higher in summer months, most of which occur in the second half of the year. The largest single destination for U.S. distillate exports in the first half of 2018 was Mexico at 289,000 b/d (Figure 4). Despite being the third-largest U.S. petroleum export, U.S. distillate exports go to the largest number of destinations—as 49 different destinations received at least 1,000 b/d in the first half of 2018.
The United States exported 913,000 b/d of motor gasoline in the first half of 2018, an increase of 144,000 b/d compared with the same period in 2017. Mexico accounted for more than half of U.S. motor gasoline exports in the first half of 2018, the largest single-destination concentration for any U.S. petroleum export (Figure 5). Years of under investment in Mexico’s refineries, combined with a mismatch between the type of crude oil produced locally and the type of crude oil Mexico’s refineries were designed to process, has resulted in low refinery utilization rates. Low refinery utilization has resulted in increased imports of motor gasoline and other petroleum products, from the United States. Mexico’s gasoline consumption ranges from 780,000 b/d to 800,000 b/d based on recent history. In the first half of 2018, U.S. gasoline exports to Mexico accounted for more than 60% of the gasoline consumed in Mexico.
U.S. average regular gasoline price decreases, diesel price increases
The U.S. average regular gasoline retail price decreased less than 1 cent from last week to $2.82 per gallon on September 3, 2018, up 15 cents from the same time last year. West Coast prices increased nearly two cents to $3.33 per gallon, and East Coast and Rocky Mountain prices each rose over one cent to $2.78 per gallon and $3.01 per gallon, respectively. Midwest prices fell nearly three cents to $2.73 per gallon and Gulf Coast prices decreased two cents to $2.55 per gallon.
The U.S. average diesel fuel price increased over 2 cents from last week to $3.25 per gallon on September 3, 2018, 49 cents higher than a year ago. Midwest prices increased nearly four cents to $3.19 per gallon, Gulf Coast prices rose over three cents to $3.04 per gallon, West Coast prices increased more than two cents to $3.74 per gallon, and East Coast prices increased over one cent to $3.24 per gallon. Rocky Mountain prices were unchanged, remaining at $3.36 per gallon.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 2.0 million barrels last week to 73.4 million barrels as of August 31, 2018, 9.7 million barrels (11.7%) lower than the five-year (2013-2017) average inventory level for this same time of year. Midwest, Gulf Coast, and East Coast inventories increased by 1.2 million barrels, 0.5 million barrels, and 0.3 million barrels, respectively, while Rocky Mountain/West Coast inventories fell slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 3.9% of total propane/propylene inventories.
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In 2021, the makeup of renewables has also changed drastically. Technologies such as solar and wind are no longer novel, as is the idea of blending vegetable oils into road fuels or switching to electric-based vehicles. Such ideas are now entrenched and are not considered enough to shift the world into a carbon neutral future. The new wave of renewables focus on converting by-products from other carbon-intensive industries into usable fuels. Research into such technologies has been pioneered in universities and start-ups over the past two decades, but the impetus of global climate goals is now seeing an incredible amount of money being poured into them as oil & gas giants seek to rebalance their portfolios away from pure hydrocarbons with a goal of balancing their total carbon emissions in aggregate to zero.
Traditionally, the European players have led this drive. Which is unsurprising, since the EU has been the most driven in this acceleration. But even the US giants are following suit. In the past year, Chevron has poured an incredible amount of cash and effort in pioneering renewables. Its motives might be less than altruistic, shareholders across America have been particularly vocal about driving this transformation but the net results will be positive for all.
Chevron’s recent efforts have focused on biomethane, through a partnership with global waste solutions company Brightmark. The joint venture Brightmark RNG Holdings operations focused on convert cow manure to renewable natural gas, which are then converted into fuel for long-haul trucks, the very kind that criss-cross the vast highways of the US delivering goods from coast to coast. Launched in October 2020, the joint venture was extended and expanded in August, now encompassing 38 biomethane plants in seven US states, with first production set to begin later in 2021. The targeting of livestock waste is particularly crucial: methane emissions from farms is the second-largest contributor to climate change emissions globally. The technology to capture methane from manure (as well as landfills and other waste sites) has existed for years, but has only recently been commercialised to convert methane emissions from decomposition to useful products.
This is an arena that another supermajor – BP – has also made a recent significant investment in. BP signed a 15-year agreement with CleanBay Renewables to purchase the latter’s renewable natural gas (RNG) to be mixed and sold into select US state markets. Beginning with California, which has one of the strictest fuel standards in the US and provides incentives under the Low Carbon Fuel Standard to reduce carbon intensity – CleanBay’s RNG is derived not from cows, but from poultry. Chicken manure, feathers and bedding are all converted into RNG using anaerobic digesters, providing a carbon intensity that is said to be 95% less than the lifecycle greenhouse gas emissions of pure fossil fuels and non-conversion of poultry waste matter. BP also has an agreement with Gevo Inc in Iowa to purchase RNG produced from cow manure, also for sale in California.
But road fuels aren’t the only avenue for large-scale embracing of renewables. It could take to the air, literally. After all, the global commercial airline fleet currently stands at over 25,000 aircraft and is expected to grow to over 35,000 by 2030. All those planes will burn a lot of fuel. With the airline industry embracing the idea of AAF (or Alternative Aviation Fuels), developments into renewable jet fuels have been striking, from traditional bio-sources such as palm or soybean oil to advanced organic matter conversion from agricultural waste and manure. Chevron, again, has signed a landmark deal to advance the commercialisation. Together with Delta Airlines and Google, Chevron will be producing a batch of sustainable aviation fuel at its El Segundo refinery in California. Delta will then use the fuel, with Google providing a cloud-based framework to analyse the data. That data will then allow for a transparent analysis into carbon emissions from the use of sustainable aviation fuel, as benchmark for others to follow. The analysis should be able to confirm whether or not the International Air Transport Association (IATA)’s estimates that renewable jet fuel can reduce lifecycle carbon intensity by up to 80%. And to strengthen the measure, Delta has pledged to replace 10% of its jet fuel with sustainable aviation fuel by 2030.
In a parallel, but no less pioneering lane, France’s TotalEnergies has announced that it is developing a 100% renewable fuel for use in motorsports, using bioethanol sourced from residues produced by the French wine industry (among others) at its Feyzin refinery in Lyon. This, it believes, will reduce the racing sports’ carbon emissions by an immediate 65%. The fuel, named Excellium Racing 100, is set to debut at the next season of the FIA World Endurance Championship, which includes the iconic 24 Hours of Le Mans 2022 race.
But Chevron isn’t done yet. It is also falling back on the long-standing use of vegetable oils blended into US transport fuels by signing a wide-ranging agreement with commodity giant Bunge. Called a ‘farmer-to-fuelling station’ solution, Bunge’s soybean processing facilities in Louisiana and Illinois will be the source of meal and oil that will be converted by Chevron into diesel and jet fuel. With an investment of US$600 million, Chevron will assist Bunge in doubling the combined capacity of both plants by 2024, in line with anticipated increases in the US biofuels blending mandates.
Even ExxonMobil, one of the most reticent of the supermajors to embrace renewables wholesale, is getting in on the action. Its Imperial Oil subsidiary in Canada has announced plans to commercialise renewable diesel at a new facility near Edmonton using plant-based feedstock and hydrogen. The venture does only target the Canadian market – where political will to drive renewable adoption is far higher than in the US – but similar moves have already been adopted by other refiners for the US market, including major investments by Phillips 66 and Valero.
Ultimately, these recent moves are driven out of necessity. This is the way the industry is moving and anyone stubborn enough to ignore it will be left behind. Combined with other major investments driven by European supermajors over the past five years, this wider and wider adoption of renewable can only be better for the planet and, eventually, individual bottom lines. The renewables ball is rolling fast and is only gaining momentum.
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