Saudi Arabia is currently the largest oil-exporting country in the world. Last year, the Middle Eastern nation shipped 7.1 million barrels of oil per day (BPD) to global markets. That's light-years ahead of the roughly 2 million BPD the U.S. exported last year.
However, America is currently on track to ship more oil than Saudi Arabia within the next five years. Fueling that surge will be the state of Texas, which should drive the bulk of the country's oil growth through 2025.
Continue Reading Below
Dual growth engines
The U.S. currently produces about 12.1 million BPD, according to the U.S. Energy Information Administration. That has the nation's oil industry on track for another record-smashing year. Several states supply this output, including California, Alaska, North Dakota, and Texas.
However, Texas is by far the biggest contributor, thanks to the presence of the Permian Basin and Eagle Ford Shale. Those two regions currently produce a combined 5 million BPD. While some of that output comes from the New Mexico side of the Permian, Texas is on track to pump more oil this year than any country besides Russia and Saudi Arabia.
Texas has more oil on the way. The Eagle Ford, which currently pumps out nearly 1.2 million BPD, should top 2.2 million BPD by 2025 — a more than 92% increase — according to a forecast from midstream giant Enterprise Products Partners (NYSE: EPD). The Permian, meanwhile, should see its oil output increase from its current rate of more than 3.8 million BPD up to nearly 8 million BPD by 2025, for more than a 107% increase. For comparison's sake, oil output in the Rockies, which has both North Dakota's Bakken Shale and Wyoming's Powder River Basin, is only on track to increase about 8% over that time frame to roughly 2.6 million BPD, according to Enterprise Products' forecast.
A building boom of epic proportions
That anticipated gusher of oil production growth in Texas has the industry planning to spend billions of dollars on building out the necessary infrastructure to move more barrels to global markets. Enterprise Products Partners is one of several companies working on oil pipelines in the region. The company is currently in the middle of converting an existing natural gas liquids line to oil service, which will help move additional Permian barrels toward the coast. Meanwhile, Canadian oil pipeline giant Enbridge (NYSE: ENB) is working with MLP Phillips 66 Partners (NYSE: PSXP) and refiner Marathon Petroleum (NYSE: MPC) to build the Gray Oak pipeline. That roughly $2 billion-system will move 900,000 BPD of crude from both the Permian as well as the Eagle Ford to refineries and export facilities along the coast of Texas.
The industry is also building and developing additional export capacity. Phillips 66 Partners and Marathon Petroleum, for example, are working with Buckeye Partners to construct the South Texas Gateway Terminal near Corpus Christi, Texas. The facility can store up to 7 million barrels and export it via two deepwater docks. Enterprise Products Partners and Enbridge, meanwhile, are developing offshore export terminals. Enterprise Products' Sea Port Oil Terminal (SPOT) would be 40 miles off the coast of Freeport, Texas, which is far enough away from shore to fully load massive Very Large Crude Carriers (VLCCs) that can carry 2 million barrels of oil. Enbridge, meanwhile, is working on the $800 million Texas COLT facility, which could also fully load VLCCs.
As these and other export projects come online, they'll enable the country to ship more oil overseas. According to Enterprise Products' forecast, the U.S. is on track to exceed Saudi Arabia's export capacity by 2024. Though that's assuming the Middle Eastern country doesn't significantly boost its exports and oil doesn't collapse again.
Everything’s bigger in Texas
Two of the biggest oil fields in the world sit beneath the state of Texas. The Lonestar State's oil output, which is already the third highest globally, is on track to roughly double by 2025. While a sizable amount of that crude will find its way into the country's refineries, a significant portion will also make its way to global markets through export facilities currently under development.
That will not only turn the country into an oil exporting behemoth but should also fuel significant growth for those building this infrastructure. That's why investors should take a closer look at companies like Enterprise Products Partners, which are racing to develop the midstream assets needed to support the country's export boom.
10 stocks we like better than Enterprise Products PartnersWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Enterprise Products Partners wasn't one of them! That's right — they think these 10 stocks are even better buys.
*Stock Advisor returns as of March 1, 2019
Matthew DiLallo owns shares of Enbridge and Enterprise Products Partners. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.