Shale Oil, Natural Gas to Make U.S. Net Exporter by 2022
Continued development of shale, tight oil and natural gas resources will lead to the transition of the U.S. from a net energy importer to a net energy exporter by 2022, according to the U.S. Energy Information Administration's (EIA) new annual outlook report.
At the same time, energy consumption is projected to grow at a more modest pace, so the forecast anticipates the supply of energy outstripping domestic energy demand in the next four years.
In its January Short-Term Energy Outlook--published earlier this week--the EIA said China surpassed the U.S. in annual gross crude oil imports in 2017, importing 8.4 million barrels per day (BBL/d) compared with 7.9 million BBL/d for the U.S.
China had become the world's largest net importer (imports minus exports) of total petroleum and other liquid fuels in 2013. New refinery capacity and strategic inventory stockpiling, combined with declining domestic oil production, were the major factors contributing to the recent increase in China's crude oil imports, EIA data showed.
In 2017, 56% of China's crude oil imports came from members of the Organization of the Petroleum Exporting Countries (OPEC)--a decline from the peak of 67% in 2012. More so than other countries, Russia and Brazil increased their market shares of Chinese imports between those years from 9% to 14% and from 2% to 5%, respectively.
Several factors are driving the increase in China's crude oil imports, the agency said. Among them: China had the largest decline in domestic petroleum and other liquids production among non-OPEC countries in 2016, and EIA estimates it will have had the second-largest decline in 2017. Total liquids production in China averaged 4.8 million BBL/d in 2017, a year-over-year decline of 0.1 million BBL/d (2%) from 2016, and further declines in both 2018 and 2019 are expected.
In contrast to declining domestic production, the EIA estimates that growth in China's consumption of petroleum and other liquid fuels in 2017 was the world's largest for the ninth consecutive year, growing 0.4 million BBL/d, or 3%, to 13.2 million BBL/d. As China has increased its inventories of strategic petroleum reserves, the country's crude imports have risen faster than their domestic consumption.
China's crude oil imports have also increased because of higher refinery runs and expanding refinery capacity. China's refinery runs increased by an estimated 0.5 million BBL/d in 2017 to 11.4 million BBL/d, driven in part by two refinery expansions in the second half of the year. A 260,000-BBL/d refinery in Anning in Yunnan province entered operations in the third quarter of 2017. The China National Offshore Oil Corporation's (CNOOC) Huizhou refinery increased capacity by 200,000 BBL/d and increased its imports from various sources in the third and fourth quarters of 2017.
Ongoing infrastructure expansions likely will contribute to further increases in China's crude oil imports. In January 2018, China and Russia began operating an expansion of the East Siberia-Pacific Ocean (ESPO) pipeline, doubling its delivery capacity to approximately 0.6 million BBL/d. According to trade press reports, as much as 1.4 million BBL/d of new refinery capacity is planned to open in China by the end of 2019. Given China's expected decline in domestic crude oil production, imports likely will continue to increase over at least the next two years.
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