American Oil and Gas Reporter - April 2019 - 37

America: Energy Epicenter
than 30 percent to average 260,000 bbl/d through the first 10
months of 2018.
Quantity And Quality
Figures 3A and 3B show the stunning growth of production
in shale gas and tight oil plays. But the U.S. shale revolution is
not about merely the quantity of the oil and gas volumes. It is
also about the quality of the production stream. The quality
factor begins with the fact that shale reservoirs tend to contain a
multiphase mix of liquid and gas hydrocarbons, providing
multiple product streams. So, for example, in the Permian
Basin-the king of tight oil plays-Texas Railroad Commission
figures show that oil production through the first 11 months of
2018 grew 21.5 percent, but gas production climbed 23 percent
and NGL production soared 52 percent.
On the other hand, in the heart of the Marcellus/Utica play in
Pennsylvania, monthly gas production from unconventional wells
jumped 72 Bcf in January 2019 compared with January 2018, but
oil and condensate output also surged by 9,719 and 8,723 barrels,
respectively, according to data from the Pennsylvania Department
of Environmental Protection's Office of Oil & Gas Management.
Of course, another defining characteristic of U.S. shale plays
is the light, sweet oil they produce, which generally requires
less complex processes to refine into transportation fuels and
other premium products since a considerably higher portion of
each barrel is made up of distillates and lighter-end hydrocarbons,
IEA notes.
With the International Maritime Organization's new marine
fuel specifications for shipping vessels taking effect on Jan. 1
(IMO 2020 tightens the emissions standard to burning the
equivalent of fuel oil with a sulfur content of less than 0.5
weight percent compared with the current limit of 3.5 weight
percent sulfur), and growing international demand for naptha in
petrochemicals production, IEA's Oil Market Report points out
that the oil produced in U.S. tight plays meets the changing
needs of the global refining market.
"The average global product barrel is getting lighter. The United
States will be in prime position as a supplier of the light types of
crude oil that are in demand. Shale oil will also help meet the new
IMO 2020 requirements and provide the quantities of naphtha
required for the petrochemicals industry," the report holds.

At home, domestic refiners are retooling existing facilities
and constructing new ones to take advantage of the lighter
crude slate. According to EIA statistics, U.S. operable refining
capacity reached a new high of 18.6 MMbbl/d in 2018, and utilization averaged 91.1 percent-the highest level since 2004,
when there was 1.26 MMbbl/d less operable capacity, and
when Gulf Coast refineries processed nearly twice as much imported crude (according to EIA data, imports accounted for 63
percent of all oil refined in the United States that year).
As tight oil production has increased, refineries have moved
away from heavier imported grades to oil produced in tight
onshore plays, where API gravities tend to be 40-50 degrees,
EIA says. As a result, the density of the crude oil slate processed
by Gulf Coast refineries has become both lighter and sweeter.
In 2004, imported crude oil processed in Gulf Coast refineries
reached 5.8 MMbbl/d, and in 2008, the gravity of crude oil
inputs averaged 29.5 degrees, according to the agency. By the
end of 2017, the gravity of crude oil inputs had increased to 32
degrees and imported crude had decreased to 3.1 million bbl/d,
EIA reports. Most Gulf Coast refinery imports remain heavy,
with crude oils at gravities less than 27 degrees accounting for
71 percent of all imported inputs in 2017. "Relatively lighter
crude oil imports had virtually disappeared by 2017," EIA says.
New Refining Capacity
Among the refinery projects under way are expansions at
two of the country's largest refineries to allow them to process
additional light, sweet volumes: ExxonMobil is constructing a
new refinery train at its complex in Beaumont, Tx., and Marathon
Petroleum is adding an incremental crude unit at its complex at
Galveston Bay, Tx.
The Beaumont facility has the capacity to process 362,000
bbl/d, about 80 percent of which is domestic oil. In January,
ExxonMobil announced plans to expand light crude oil refining
capacity by 250,000 bbl/d. Startup is anticipated in 2022, and the
incremental crude barrels are expected to come from the Permian,
where ExxonMobil says it plans to triple daily production to
more than 600,000 barrels of oil equivalent by 2025.
The Permian provides low-cost supply and feedstocks to
ExxonMobil's downstream and chemical operations in Texas
and Louisiana, points out Sara Ortwein, president of ExxonMobil's

FIGURE 3A
U.S. Tight Oil Production

FIGURE 3B

Spraberrry (TX Permian)
Bakken (ND & MT)
Wolfcamp (TX & NM Permian)

Bonespring (TX & NM Permian)
Niobrara-Codell (CO & WY)

Austin Chalk (LA & TX)
Woodford (OK)
Rest of U.S. 'tight oil'

2005

2007

2009

2011

2013

2015

2017

2.5
2.0
1.5
1.0
0.5
0.0
2019

Marcellus (PA, WV, OH & NY)
Permian (TX & NM)
Utica (OH, PA & WV)
Haynesville (LA & TX)
Eagle Ford (TX)
Barnett (TX)
Woodford (OK)
Bakken (ND & MT)
Niobrara-Codell (CO & WY)
Mississippian (OK)
Fayetteville (AR)
Rest of U.S. 'shale'

2005

2007

2009

2011

2013

2015

2017

70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
2019

Bcf/d

Mississippian (OK)

U.S. Dry Shale Gas Production

Million Barrels of Oil per Day

7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0

Eagle Ford (TX)

APRIL 2019 37

American Oil and Gas Reporter - April 2019

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