Why the US is Not the New S. Arabia
By Kurt Cobb
Last week’s energy news included a piece from the Associated Press with a headline reading: “U.S. poised to become world’s top oil producer; may soon overtake Saudi Arabia.” If the reporter had actually examined figures available from the U.S. Energy Information Administration (EIA) website carefully instead of simply parroting oil industry sycophants, he would have ended up with a headline more like this: “Marginal gains in U.S. oil production mean continuing high prices and imports for Americans.”
As it turns out, U.S. crude oil production is averaging 6.2 million barrels per day (mbpd) so far this year compared to Saudi Arabia’s 9.9 mbpd. So, how did the reporter and his sources end up with a production number of 10.9 mbpd for the United States?
The problem results from the deceptive redefinition of oil supply by the oil industry itself, one designed to obscure the true oil supply picture and one that, unfortunately, has been adopted by some government agencies. Within the last decade the industry began to count something called natural gas plant liquids (NGPL) as part of oil supply. Here’s how I’ve explained NGPL previously:NGPL are hydrocarbons other than methane that are separated from raw natural gas at a processing plant. They include ethane, propane, butane and pentane. The amounts vary. For example, raw natural gas extracted off the coast of Malaysia contains 11 percent ethane, 5 percent propane, 2 percent butane and about 2 percent of something called natural gasoline or drip gas, a low-octane fuel that is used today primarily as a solvent. Raw natural gas from the North Slope of Alaska contains a higher percentage of methane and correspondingly smaller percentages of ethane (7 percent), propane (4 percent), butane (1 percent) and other components including carbon dioxide and pentanes (2 percent). In these two cases you can see that ethane makes up about half of the NGPL, propane makes up about a quarter, butane makes up 10 percent of Malaysian NGPL and 7 percent of Alaskan slope NGPL.
As you will note, these products all come from natural gas, not oil. While it is true that propane and butane are used as vehicle fuel in a very limited way, most of the volume of NGPL cannot easily be used as a substitute for oil. And, it is doubtful that either propane or butane could become major vehicles fuels since they make up only a small fraction of natural gas and are limited in their supply by the amount of natural gas extracted. Some NGPL are used as feedstocks for chemical production, just as petroleum is. But the likelihood that NGPL would significantly displace oil in this market as it is currently configured is small.
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