Energy
Craft Oil: The Lesser Known Side of America’s Energy Industry
Craft Oil: The Lesser Known Side of America’s Energy Industry
Go back a decade, and America’s energy industry was quite the hot button issue.
Oil prices were soaring past $100/bbl, the country was still reliant on OPEC for imports, and a lack of energy independence was becoming a costly issue. Meanwhile, the United States was being outclassed on the energy production front by both Saudi Arabia and Russia.
However, in the short span of eight years – and thanks to the use of technologies like horizontal drilling and hydraulic fracturing – the United States quickly went from having a questionable energy future to being in a clear position of strength. Today, even with lower prices, U.S. field production of crude is at a 43-year high.
America’s Independent Oil Producers
Since 2016, the U.S. has produced close to the equivalent of 30 million bpd in oil and natural gas, making the United States a champion of global energy production.
Today’s infographic from Jericho Oil focuses on a key part of the turnaround in the U.S. energy sector that often gets overshadowed by Big Oil players like ExxonMobil or Royal Dutch Shell. It covers the role of “Craft Oil” in the industry, an umbrella that includes many small, independent, and focused companies across America that produce oil and gas on a domestic basis.
The thousands of companies in this group, many which are community-driven or family-owned, actually drill 95% of the country’s oil wells to yield 54% of onshore oil and 85% of onshore gas production.
Comparing Big Oil to Craft Oil
Below is a comparison of ExxonMobil to the profile of an average Craft Oil company:
Employees | ||
Years in Business | ||
Annual Gross Revenues | ||
Ownership | ||
Level of Integration | ||
Focus | ||
Production |
Most Craft Oil companies are very small in comparison – but together, they contribute to a very significant portion of U.S. production, as well as the economy.
Investing in Craft Oil
Do these independent producers provide a strategic opportunity for investors?
Yes, but here are a few areas investors should consider evaluating before taking any action:
Location of Assets:
In the U.S. and Canada, independent oil companies undergo strong regulatory scrutiny to make sure their reporting and numbers give transparency to their operations.
Cash and Debt:
How much does the company have in cash? Will they have to raise more money soon?
Companies operating in junior oil and gas should not have more than 2x more debt than their current cash flow.
Management Team:
The strength of any management team is linked to their connections, past experience, and skill set. If the management team has built and sold successful projects in the past, that is a good sign of strength.
Economics:
Investors need to be aware of key metrics to gauge if junior oil and gas companies can make money in the current or projected cost environment. These include IRR (Internal Rate of Return), NPV (Net present value), and payback period. Companies that make their money back fast and with a good return can re-invest that capital into additional projects.
Energy
How Much Does the U.S. Depend on Russian Uranium?
Currently, Russia is the largest foreign supplier of nuclear power fuel to the U.S.
How Much Does the U.S. Depend on Russian Uranium?
This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email.
The U.S. House of Representatives recently passed a ban on imports of Russian uranium. The bill must pass the Senate before becoming law.
In this graphic, we visualize how much the U.S. relies on Russian uranium, based on data from the United States Energy Information Administration (EIA).
U.S. Suppliers of Enriched Uranium
After Russia invaded Ukraine, the U.S. imposed sanctions on Russian-produced oil and gas—yet Russian-enriched uranium is still being imported.
Currently, Russia is the largest foreign supplier of nuclear power fuel to the United States. In 2022, Russia supplied almost a quarter of the enriched uranium used to fuel America’s fleet of more than 90 commercial reactors.
Country of enrichment service | SWU | % |
---|---|---|
🇺🇸 United States | 3,876 | 27.34% |
🇷🇺 Russia | 3,409 | 24.04% |
🇩🇪 Germany | 1,763 | 12.40% |
🇬🇧 United Kingdom | 1,593 | 11.23% |
🇳🇱 Netherlands | 1,303 | 9.20% |
Other | 2,232 | 15.79% |
Total | 14,176 | 100% |
SWU stands for “Separative Work Unit” in the uranium industry. It is a measure of the amount of work required to separate isotopes of uranium during the enrichment process. Source: U.S. Energy Information Administration
Most of the remaining uranium is imported from European countries, while another portion is produced by a British-Dutch-German consortium operating in the United States called Urenco.
Similarly, nearly a dozen countries around the world depend on Russia for more than half of their enriched uranium—and many of them are NATO-allied members and allies of Ukraine.
In 2023 alone, the U.S. nuclear industry paid over $800 million to Russia’s state-owned nuclear energy corporation, Rosatom, and its fuel subsidiaries.
It is important to note that 19% of electricity in the U.S. is powered by nuclear plants.
The dependency on Russian fuels dates back to the 1990s when the United States turned away from its own enrichment capabilities in favor of using down-blended stocks of Soviet-era weapons-grade uranium.
As part of the new uranium-ban bill, the Biden administration plans to allocate $2.2 billion for the expansion of uranium enrichment facilities in the United States.
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