Eagle Ford Crude is Pushing Out African Imports

Eagle Ford crude production is pushing out African imports. The Gulf Coast region alone is importing 400,000 barrels per day less than it did at this time in 2010. Domestic oil production is on the rise and foreign crude will continue to be displaced by locally sourced Bakken, Eagle Ford, and Permian crudes. Don't expect that trend to slow as the Bakken and Eagle Ford are on pace to produce 1 mmboe/d each in less than five years.

Don't underestimate the advantages of domestic crude. There are a lot more jobs on the upstream side of the business. It takes multiples more to drill and produce than it does to refine oil. The oil patch is a bright spot in what has been a rather dim jobs market over the past couple of years. As long as oil prices support development, this trend isn't going to change any time soon.

"Crude from Eagle Ford in Texas is coming through, and a rail terminal has opened, taking about 70,000 barrels of crude from North Dakota down to Louisiana," Jordan said.

Eagle Ford Formation

Marathon Petroleum Corp. is moving oil from the Eagle Ford shale-rock formation to its refinery at Texas City, according to the company. Daily production of crude and condensates at Eagle Ford has almost doubled this year from 2010, according to data from the Railroad Commission of Texas.

Refining margins in the U.S. Gulf have sunk to a loss of $0.42 a barrel Nov. 11 from a profit of $16.67 on May 10, the highest in more than 2 1/2 years, Bloomberg data show. The margin is calculated based on the return for turning three barrels of Light Louisiana Sweet crude into two barrels of gasoline and one of diesel. It has averaged $5.73 a barrel this year.

The U.S. imported an average 4.4 million barrels of crude a day to the Gulf Coast in the week ended Nov. 4, compared with 4.8 million in the same week last year, according to the Energy Department. Imports averaged 5 million barrels a day this year. Inventories in the U.S. Midwest are at the highest level for the time of the year in at least a decade, at 92.2 million barrels.