We’re seeing more and more production of lighter crude oil in the U.S. according to the U.S. Energy Information Administration….that is…oil with a lower density.
The EIA’s “Today in Energy” report indicated the average API gravity, which is the measure of a crude oil’s density increased in 2017 and through the first half of 2018. When API gravity is figured, the higher numbers mean lower density.
The EIA indicated crude oil production with an API gravity larger than 40 degrees increased by 310,000 bpd to more than 4.6 million bpd in 2017. The increase represented 53% of the total production in Oklahoma and the Lower 48 last year which was a 50% jump from 2015.
Here’s how the EIA reported it:
API gravity is measured as the inverse of the density of a petroleum liquid relative to water. The higher the API gravity, the lower the density of the petroleum liquid, meaning lighter oils have higher API gravities. The increase in light crude oil production is the result of the growth in crude oil production from tight formations enabled by improvements in horizontal drilling and hydraulic fracturing.
Along with sulfur content, API gravity determines the type of processing needed to refine crude oil into fuel and other petroleum products, all of which factor into refineries’ profits. Overall US refining capacity is geared toward a diverse range of crude oil inputs, so it can be uneconomic to run some refineries solely on light crude oil. Conversely, it is impossible to run some refineries on heavy crude oil without producing significant quantities of low-valued heavy products such as residual fuel.
API gravity can differ greatly by production area. For example, oil produced in Texas, US – the largest crude oil-producing state – has a relatively broad distribution of API gravities with most production ranging from 30 to 50 degrees API. However, crude oil with API gravity of 40 to 50 degrees accounted for the largest share of Texas production, at 55%, in 2017. This category was also the fastest growing, reaching 1.9 million bpd, driven by increasing production in the tight oil plays of the Permian and Eagle Ford.
Oil produced in the Bakken formation of North Dakota, US, also tends to be less dense and lighter. About 90% of North Dakota’s 2017 crude oil production had an API gravity of 40 to 50 degrees. The oil coming from the Federal Gulf of Mexico (GOM) tends to be more dense and heavier. More than 34% of the crude oil produced in the GOM in 2017 had an API gravity of lower than 30 degrees and 65% had an API gravity of 30 to 40 degrees.
In contrast to the increasing production of light crude oil in the United States, imported crude oil continues to be heavier. In 2017, 7.6 million bpd (96%) of imported crude oil had an API gravity of 40 or below, compared with 4.2 million bpd (48%) of domestic production.
EIA collects API gravity production data by state in the monthly crude oil and natural gas production report as well as crude oil quality by company level imports to better inform analysis of refinery inputs and utilisation, crude oil trade, and regional crude oil pricing. API gravity is also projected to continue changing: EIA’s Annual Energy Outlook 2018 Reference case projects that US oil production from tight formations will continue to increase in the coming decades.
