Matt Zborowski
Staff Writer
During the final day of a year in which depressed crude oil prices and depressed moods gave US industry professionals plenty of reasons to drown their sorrows, a freshly loaded tanker sloshing around the Port of Corpus Christi, Tex., represented something of a glimmer of hope.
That afternoon, the Bahamas-flagged Theo T began its journey toward Italy, carrying the United States' first known export cargo of domestically produced light crude since the 40-year-old ban was lifted on Dec. 18.
It's one of two batches of crude-condensate produced in the Eagle Ford to be piped to NuStar Energy LLP's North Beach terminal, and sold by ConocoPhillips to Rotterdam-based global energy and commodity trading firm Vitol Group.
Several days later and more than 200 miles up the Texas coast, a 600,000-bbl cargo of domestic light crude was loaded from the Enterprise Hydrocarbon Terminal (EHT) and departed the Houston Ship Channel, its first shipment since the ban was lifted. That batch, also purchased by Vitol, is destined for France via the Liberia-flagged Angelica Schulte tanker.
Oversupply? Sell to Europe
In many ways, things haven't changed since America's first oil boom in Pennsylvania during the middle of the 19th century. The market was volatile, with supply and demand shifting dramatically along with oil prices, which ranged from less than $20/bbl not long after the first well was drilled in 1859 to about $120/bbl during the Civil War. When oversupply became an issue, producers sought new avenues through which to sell their product.
With that in mind, Philadelphia import-export firm Peter Wright & Sons chartered a 224-ton brig named Elizabeth Watts with the intent of selling to Europe. However, loading and transporting oil from fields that sprung the country's first commercial well, located along a creek in northwestern Pennsylvania, to the railroad and then to the dock proved to be a dicey proposition, as described by the American Oil & Gas Historical Society (AOGHS):
"The nearest railroad to Oil Creek's prolific fields was a grueling trek on muddy roads clogged with teamsters' wagons. The preferred railhead, owing to primitive road conditions, was the Philadelphia and Erie Railroad station at Miles Mills, now Union City, 20 miles north of Titusville.
"From Miles, railroad flatcars laboriously stacked with barrels and pulled by a steam locomotive could make their way eastward to Philadelphia. Along the route, saltwater residue would eat at the barrels' glue and cause leakage. The risk of fire or explosion would be constant."
Eventually, 901 bbl of Pennsylvania crude and 428 bbl of refined kerosene were transported to the dock, with each filled 40-gal barrel-a precursor to the 42-gal barrel standard adopted in 1866-weighing 360-400 lb, AOGHS says. Dockworkers took 10 days to load the entire cargo aboard the Elizabeth Watts.
The brig set sail from Philadelphia on Nov. 19, 1861, crossed the Atlantic with its explosive and noxious contents, and arrived safely in London 45 days later on Jan. 9, 1862, 154 years to the month before the most recent US oil export milestone. For comparison, the Theo T and Angelica Schulte tankers are expected to take less than 3 weeks to arrive at their respective destinations this month.
Quick on the uptake
A year after Elizabeth Watts' journey, 239,000 bbl of oil were exported from Philadelphia using the same primitive methods and equipment, an impressive feat given the era. In 2015, it was only a matter of days after the export ban was lifted before US firms had cargoes several times that amount loaded and ready for transport across an ocean.
How much oil will the US export a year from now? How about 5, 10, or 20? Will there be a noticeable effect on the US market? If the industry has learned anything over the past year or 154 years, it's that one should underestimate neither the market's unpredictability nor Americans' ability to adapt and seize opportunity in spite of the circumstances.
