Could also be approximated using market price of close substitute. Includes transactions in water rights. May require shadow pricing.
April 6, Preface U. Energy Information Administration EIA data, which reflect combined production of crude oil and lease condensate, show a rise from 5. Increasing production of light crude oil from low-permeability, or tight, resource formations in regions like the Bakken, Permian Basin, and Eagle Ford, often referred to as light tight oil LTOaccounts for nearly all the net growth in U.
EIA's Annual Energy Outlook AEO projects further production growth, but its pace and duration remain uncertain, as shown by the significant differences in both the timing and level of the highest volume of U. Recent and forecast increases in domestic crude oil production have sparked discussion on the topic of how rising crude volumes might be absorbed.
As EIA noted nearly two years ago, relaxation of restrictions on U.
Recognizing that some options, such as like-for-like replacement of import streams, are inherently limited, the question of how a relaxation in current limitations on crude exports might affect domestic and international markets for both crude oil and products continues to hold great interest for policymakers, industry, and the public.
In response to multiple requests, EIA is developing analyses that shed light on this question, including earlier reports on U.
This report examines technical options for processing additional LTO volumes within the United States. Unlike crude oil, products are not subject to export limitations or licensing requirements. While this is one possible approach to absorbing higher domestic LTO production in the absence of a relaxation of current limitations on crude exports, domestic LTO would have to be priced at a level required to encourage additional LTO runs at existing refinery units, debottlenecking, or possible additions of processing capacity.
The cost of such adjustments or capacity additions, together with the perception of market and policy risks surrounding potential investments, will determine the extent to which LTO might need to be discounted to spur those investments.
The analysis of technical options for additional domestic LTO processing discussed in this report, together with the previous analyses cited above, provide a foundation for further analyses of the market outlook and the effects of a possible relaxation of existing restrictions on U.
Executive summary With the growth in U. To date, increased runs of domestic LTO have mainly been facilitated by a reduction of light crude oil imports, particularly to refineries on the U. In addition, refinery utilization rates have increased, and some imports of heavier crude types have also been displaced in some U.
The sharp decline in oil prices in recent months may slow domestic LTO production growth in the immediate future. However, there is significant potential for further growth in domestic LTO production. This is particularly the case in scenarios with favorable resource availability, technology development, and oil prices that rise above their level in earlyeven if they remain below the range sustained from through mid For this reason, there is considerable interest in how additional volumes of domestically produced LTO might be accommodated.
With the rise in domestic production of petroleum products and a general decline in U. There are no limitations on U.
Because petroleum product use is not significantly affected by the level of U. The relaxation of current limitations on exports of crude oil, another possible way to accommodate additional LTO production volumes, is not considered in this report.
However, the discussion of technical options for additional domestic processing provided here points to several key issues that will be addressed in forthcoming analysis that considers how markets might evolve with or without changes in current limitations on crude oil exports.
How large is the opportunity to further increase the utilization of existing refining assets to process more LTO, and what are the economic costs associated with such increased utilization?
What is the actual opportunity for LTO to displace non-similar grades of imported crude oil? At what rates of return and payback periods would investments in additional processing capacity become attractive, given the risks associated with future changes to policy, prices, and production?
How might the costs associated with processing more LTO in domestic facilities be reflected in prices paid to LTO producers? How would any price discount affect projected LTO production? There are several different ways that U. Beyond their varying associated costs, the options have different implications for overall U.
Once the growth in throughput volume from no- or low-cost import substitution or debottlenecking options has been fully realized, further increases in LTO processing would require significant investments in new processing facilities.
Refiners would likely prefer low-cost investment options to larger and more-expensive facilities given market, timing and policy risks associated with large-scale investments. Limited- or no-investment-cost options The cheapest and simplest option for U.
Refiners are likely to increasingly consider other options, such as displacing volumes of non-light crude oil imports, increasing refinery utilization rates, or making limited investments in debottlenecking existing refinery infrastructure.
As these light crude oil imports have been displaced, refiners looking to process additional domestic LTO production with existing capacity have reduced imports of comparatively heavier crude types.
This can result in a lighter overall crude oil input slate to U. To offset some of the impact of the lighter crude inputs on refinery operations, refiners can purchase additional volumes of heavy crude oil imports for blending, as medium crude oil imports are displaced.
Additionally, although total production volumes would be unaffected by this blending process, the slate of petroleum products may be altered. Another technical option would be to process LTO in refineries that are optimized to process heavy crude slates, accepting the inherent operational inefficiencies.
While there would be no large investment cost, the opportunity cost could prove to be very large, even if LTO was available domestically at a significant discount to comparable global crudes. One consideration is that many of the heavy crude types currently processed in complex Gulf Coast refineries have few alternative markets.RESEARCH ARTICLES Enhancement of Critical Parameters of Natural Ester Liquids Using SiO 2 Insulating Nanoparticle M.
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The various techniques presented here include the estimation of demand curves and the area beneath them, analysis of market-like transactions, use of production approaches that consider the contribution of water resources to the production process, estimation of the costs of providing alternative sources of water, as well as other techniques used to estimate environmental resources more generally.
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It is a common practice for classes to do their fieldwork on their economic enterprise, particularly if they have chosen a case study close to the school.