7. OIL

The shortage of pipeline takeaway capacity limits further growth of LTO production; oil exceeding pipeline capacity has to be transported instead by rail, and this bottleneck results in regional price differentials of up to USD 25/bbl. The expansion of the crude oil pipeline network would improve the situation.

Oil security

As referenced previously, the DOE serves as the US NESO, with responsibility for initiating and co-ordinating a US response to an oil supply disruption. The Office of International Affairs co-ordinates these efforts. The NESO structure’s primary components include the DOE executive team, the crisis assessment team, and DOE support offices. These groups work together to generate DOE recommendations to the president and execute any response to a crisis. The newly created CESER is responsible for co-ordinating response efforts with FEMA and the Department of Homeland Security.

The United States complies with the IEA requirement of holding 90 days of net imports. The volume of SPR was at 650 mb at the end of December 2018, and it will be around 400 mb in 2028 after all existing mandated sales are completed. The United States will remain fully compliant with the IEA obligation to hold 90 days of net imports after those sales, as net imports are declining and the United States might become a net exporter in 2021.

SPR sales free up space in the caverns that hold the SPR oil. As such, these caverns represent an affordable storage option that could be leased by the US government to foreign governments to store their obligated oil stocks. At the time of writing, Congress is also working on legislation to facilitate such use of SPR caverns by private companies. In order to make the commercial option happen, technical modifications seem necessary.

Recommendations

The US government should:

Provide timely access to attractive acreage on the OCS and ensure a streamlined regulatory process for exploration and production in areas outside the Gulf of Mexico. Make use of joint spatial planning to take into account the different interests of the oil and gas industry and other users of the OCS (e.g. fishing interests, maritime activities and wind farm developments).

Monitor and measure the results of the 45Q tax credit scheme for onshore EOR based on CCUS, and assess how such a scheme could be better used to stimulate offshore EOR.

Facilitate a platform for enhanced transfer of technologies and best practices among the oil and gas industry, technology vendors, and the academic sector.

References

BOEM (Bureau of Ocean Energy Management) (2018a), Alaska Leasing Office, www.boem.gov/Alaska-Leasing/.

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7. OIL

BOEM (2018b), Beaufort Sea OCS Oil and Gas Lease Sale, www.boem.gov/beaufort-call/.

BOEM (2017), Request for Information and Comments on the Preparation of the 2019-2024 National Outer Continental Shelf Oil and Gas Leasing Program, Federal Register, www.boem.gov/82-FR-30886/.

BSEE (Bureau of Safety and Environmental Enforcement) (2018), Oil Spill Preparedness Division, www.bsee.gov/what-we-do/oil-spill-preparedness.

DOE (US Department of Energy) (2018a), Strategic Petroleum Reserve (SPR), Origins www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve.

DOE (2018b), History of SPR releases, www.energy.gov/fe/services/petroleum- reserves/strategic-petroleum-reserve/releasing-oil-spr.

DOE (2018c), SPR Quick Facts and FAQs, www.energy.gov/fe/services/petroleum- reserves/strategic-petroleum-reserve/spr-quick-facts-and-faqs.

DOE (2018d), Community Guidelines for Energy Emergencies, www.energy.gov/ceser/community-guidelines-energy-emergencies.

DOE (2014), Energy Department Announces First Regional Gasoline Reserve to Strengthen Fuel Resiliency, www.energy.gov/articles/energy-department-announces-first- regional-gasoline-reserve-strengthen-fuel-resiliency.

EIA (US Energy Information Administration) (2019), Top 10 refineries operable capacity, www.eia.gov/energyexplained/index.php?page=oil_refining#tab4, accessed 14-08-2019.

EIA (2018a), The United States is now the largest global crude oil producer, www.eia.gov/todayinenergy/detail.php?id=37053, accessed 14-01-2019.

EIA (2018b), Oil: Crude and Petroleum Products Explained, www.eia.gov/energyexplained/print.php?page=oil_where, accessed 14-01-2019.

EIA (2018d), Working and net available shell storage capacity, www.eia.gov/petroleum/storagecapacity/.

EIA (2015), Effects of Removing Restrictions on U.S. Crude Oil Exports, www.eia.gov/analysis/requests/crude-exports/.

EPA (Environmental Protection Agency) (2014), U.S. crude exports in April rise to highest level in 15 years, www.eia.gov/todayinenergy/detail.php?id=16711.

FERC (Federal Energy Regulation Commission) (2019), What FERC does (webpage), www.ferc.gov/about/about.asp.

FERC (2018), Office of Energy Projects, Pipelines Certificates, www.ferc.gov/about/offices/oep/oep-pc.asp.

IEA (International Energy Agency) (2019a), World Energy Balances 2019 [database], IEA, Paris, www.iea.org/statistics/.

IEA (2019b), Oil Information 2018 [database], IEA, Paris, www.iea.org/statistics/.

IEA (2019c), Oil 2019: Analysis and Forecasts to 2024, IEA, Paris, www.iea.org/oil2019/. IEA (2019d), Monthly Oil Data Service [database], IEA, Paris, www.iea.org/statistics/mods/. IEA (2018a), Energy Prices and Taxes 2018, IEA, Paris, www.iea.org/statistics/.

IEA (2018b), World Energy Outlook 2018, IEA, Paris, www.iea.org/weo2018/.

PHMSA (Pipeline and Hazardous Materials Safety Administration) (2018), Office of Pipeline Safety, www.phmsa.dot.gov/about-phmsa/offices/office-pipeline-safety.

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