Bloomberg News

U.S. Fuel Exports to Double by 2015, Wood Mackenzie Forecasts

March 12, 2012

U.S. exports of gasoline, diesel and other fuels will more than double in the next three years as refiners take advantage of a growing supply of domestic crudes and ship more fuel to emerging markets, according to research firm Wood Mackenzie Ltd.

Exports will rise by 450,000 barrels a day by 2015 as domestic demand shrinks and more products are sent to Latin America, Africa and other regions where fuel use is increasing, Alan Gelder, head of downstream consulting at Edinburgh-based Wood Mackenzie, said during a presentation at an American Fuel and Petrochemical Manufacturers conference in San Diego.

The U.S. exported more gasoline, diesel and other fuels than it imported in 2011 for the first time since 1949 as sales in North America contracted and consumption in regions like Latin America climbed, the Energy Department said Feb. 29. Shipments abroad of petroleum products exceeded imports by 439,000 barrels a day last year, the department said.

“U.S. gasoline demand is going one way, and that’s down,” Gelder said. “So to the question of can the U.S. transform into a global export center, we say yes. That can be done.”

Shipments outside the U.S. will increase at a rate of 60,000 to 80,000 barrels a day in the years after 2015, he said.

U.S. fuel demand will drop 0.4 percent to 18.77 million barrels a day in 2012, the Energy Department forecast last month in its Short-Term Energy Outlook. Consumption of oil and petroleum products dropped 7.8 percent between 2005 and 2010, according to the department.

Mexico’s use of U.S.-made gasoline was 44 percent higher last year than in 2010, the Energy Department said last month.

Gulf Refineries

Enbridge Inc. (ENB) and Enterprise Products Partners LP (EPD) plan to reverse the direction of the Seaway oil pipeline on June 1, sending crude from Cushing, Oklahoma, to the Gulf Coast. Stockpiles at Cushing, the delivery point for New York futures, surged 23 percent this year to a seven-month high on March 2.

Refineries on the Gulf Coast were operating at 86.8 percent of capacity in the week ended March 2, up from 80.5 percent a year ago, Energy Department data show. Motiva Enterprises LLC is scheduled to double capacity at its 300,000-barrel-a-day Port Arthur refinery in Texas during the first quarter.

Valero Energy Corp. (VLO) exported an average of 65,000 barrels per day of gasoline, or 5.1 percent of production, and 180,000 barrels per day of distillates, 17 percent of output, in the fourth quarter, Bill Day, a spokesman at the company’s headquarters in San Antonio, said in an e-mail.

Motiva’s expansion will probably mean “additional volumes exported” from the Gulf Coast, Bill Klesse, Valero’s chief executive officer, said during the conference in San Diego. Refinery closures on the East Coast, including Sunoco Inc. (SUN)’s Marcus Hook and ConocoPhillips (COP)’ Trainer plants, have boosted demand for fuel deliveries from the Gulf.

“There will be more supply, no question about it,” Klesse said in an interview. “The export markets have continued strong. The refineries that shut down on the East Coast have created an opportunity.”

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Bradley Olson in Houston at bradleyolson@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net


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