Oil Infrastructure

The ability to produce, refine and transport oil is essential to U.S. economic competitiveness. Following several decades of steady decline, U.S. oil production has risen sharply since 2008, presenting a remarkable opportunity to improve the nation’s energy security, support increased industrial activity and make energy more affordable for American households. However, significant infrastructure investments must be made to fully leverage the benefits and opportunities afforded by abundant domestic oil resources. Timely updates and expansions to the existing pipeline and storage infrastructure systems will be essential to ensuring that crude oil and refined products are efficiently and safely transported from new and geographically diverse production hubs to refineries along the West and Gulf Coasts, as well as to demand centers across the country. System statistics include:

• The U.S. energy industry is supported by approximately 76,000 miles of crude oil pipelines, more than one-third of which were installed before 1960.
• The United States has 141 operable petroleum refineries, with a combined crude oil distillation capacity of 18.6 million barrels per day.
• Growth in unconventional oil production has relied on expansion of the nation’s oil infrastructure system. From 2010 to 2014 U.S. crude oil pipelines expanded by 12,000 miles — the equivalent length of 12 Keystone XL pipelines.

A rapid expansion in shale and tight oil production is driving fundamental changes in how and where petroleum is produced.

• Oil produced by hydraulically fractured wells expanded from less than 2 percent of total U.S. production in 2000 to roughly half of the nation’s oil output in 2015.
• Increased shale production has displaced imports, with net crude imports accounting for just 25 percent of products supplied in 2016, down from 60 percent in 2005.
• The uptick in unconventional domestic oil production and decline in oil imports have reversed long-standing flows of crude oil within the United States. During the 1990s, imported oil flowed in through the Gulf of Mexico, and the Gulf Coast received just 15 million barrels per year of crude from the Midwest. By 2013, flows from the Midwest — including the Bakken fields in North Dakota — to the Gulf Coast reached 172 million barrels per year.
• Bottlenecks and inefficiencies in the oil pipeline system have depressed North American crude prices, with WTI prices (the U.S. benchmark) trading at a consistent discount to Brent prices (the EU benchmark) since late 2010.

Robust domestic oil production and increased activity at U.S. refineries are driving investments to improve and expand crude and oil products infrastructure capacity.

• An estimated $11.57 billion was spent to construct 6,805 miles of new crude oil transmission pipelines that began operating in 2015.
• Industry forecasting models suggest that 170–253 miles of oil products pipelines will need to be upgraded, replaced or refurbished each year through 2035, requiring approximately $250 million–$500 million in annual investment, to support increased production at U.S. refineries.

Recent investments made to strengthen U.S. oil infrastructure have generated substantial economic returns, and continued investment will be critical to supporting the domestic energy industry and expanding economic growth.

• The 6,805 miles of new crude oil pipelines that were constructed in 2015 are estimated to have boosted temporary U.S. employment by 164,111 jobs — roughly 24 jobs per mile of pipeline — and expanded gross domestic product (GDP) by $15.6 billion (estimates include direct, indirect and induced effects of construction spending).
• In 2015 alone, $2.3 billion in operations and maintenance expenditures on the country’s existing crude oil pipeline network were estimated to have increased U.S. employment by more than 26,000 jobs, contributing $3.7 billion to U.S. GDP.
• The Congressional Budget Office estimates that U.S. real GDP will be 0.7 percent higher in 2020 — and 0.9 percent higher in 2040 — than it would have been without shale resource development.