Oil and Gas

Craft Oil: The Lesser Known Side of America’s Energy Industry

Published

5 years ago

March 14, 2018

Jeff Desjardins

Craft Oil Infographic

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:

	Big Oil	Craft Oil
Employees	71,300	12
Years in Business	108 years	23 years
Annual Gross Revenues	$218.6 billion	$9.25 million
Ownership	Publicly traded	75% private, 25% public
Level of Integration	Typically fully integrated, combining upstream and downstream activities to get the most out of the value chain	Usually a pure play, focused upstream on oil exploration and production
Focus	Produce, transport, refine, and market oil products	Develop new plays, and drive upstream trends such as technological innovation
Production	Domestic and international	Mostly domestic

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.

Related Topics:united states craft oil domestic oil energy Gas

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Oil and Gas

Map: Oil and Gas Spills in the U.S. Since 2010

Oil and gas spills can be messy, but where are they most likely to occur? This graphic looks at oil and gas spills in the U.S. since 2010.

Creator Program

Published

1 week ago

March 13, 2023

Aran Ali

Mapped: Oil and Gas Spills in the U.S. Since 2010

The recent energy crisis has highlighted the integral role that hydrocarbons play in fueling the modern world, but these fossil fuels still come with their fair share of downsides.

Aside from the obvious climate impact they bring, one other downside in particular is spills, which can lead to ecological and economic damage. These can happen due to pipeline leaks, train derailments, or other industrial disasters.

This graphic from Preyash Shah provides a visual overview of every oil and gas spill in the contiguous U.S. since 2010. Data is tracked by the U.S. government’s Pipeline and Hazardous Materials Safety Administration (PHMSA).

U.S. Oil and Gas Spills (2010‒2022)

The majority of spills that have occurred come mostly from crude oil, followed by petroleum products and gas. Note that this data covers the quantity of spills and not damages or volume.

Spills by Product Type	Portion of all U.S. Spills
Crude oil	51%
Petroleum products	32%
Diesel	14%
Gasoline	13%
Others	5%
Highly volatile liquids & flammable gas	16%
Liquefied petroleum gas / natural gas liquids	8%
Other highly volatile liquids	6%
Anhydrous ammonia	2%
Others	3%
Carbon dioxide	2%
Biofuel	1%

Data figures add to 102% due to rounding errors, bolded figures represent the sum of subcategories

Crude oil, which makes up just over half of documented spills, is also one of the most costly. Contaminations can persist for years after a spill, and its impact on local mammals and waterfowl is particularly harsh.

This has been the case with the Deepwater Horizon spill (also known as the “BP oil spill”), which experts say is still causing harm in the Gulf of Mexico.

Other products with lots of spills include petroleum products such as diesel or gasoline, as well as liquefied natural gas or other volatile liquids. Interestingly, liquefied carbon dioxide can also be transported in pipelines, commonly used for carbon capture storage, but requires high pressure to maintain its state.

When looking at the location of spills, it’s clear that the South Central states have experienced the highest number of disasters. In contrast, the West Coast has had substantially less activity. However, this makes much more sense when looking at the dominant oil producing states, where Texas and surrounding neighbors reign supreme.

Rank	State	Oil & Gas Spills (2010-2022)
1	Texas	1936
2	Oklahoma	407
3	Louisiana	297
4	California	253
5	Kansas	208
6	Illinois	181
7	Wyoming	155
8	New Jersey	128
9	New Mexico	114
10	North Dakota	98
11	Indiana	93
12	Minnesota	83
13	Ohio	82
14	Pennsylvania	71
15	Iowa	66
16	Missouri	65
17	Michigan	56
18	Colorado	55
19	Mississippi	53
20	Montana	46
21	Wisconsin	42
22	Alabama	36
23	Arkansas	33
24	Newbraska	31
25	Georgia	28
26	Virginia	27
27	North Carolina	24
28	Kentucky	21
29	South Carolina	19
30	Alaska	16
30	New York	16
32	Tennessee	15
33	South Dakota	14
33	Washington	14
35	Florida	13
36	Maryland	11
37	Utah	9
38	Idaho	8
38	Oregon	8
40	Hawaii	7
41	West Virginia	6
42	Massachesueuts	3
43	Conneticut	2
43	Maine	2
43	Nevada	2
43	Puerto Rico	2
47	Arizona	0
47	Delaware	0
47	New Hampshire	0
47	Vermont	0

Of the 4,901 spills during this period, Texas accounts for 1,936 or roughly 40% of all oil and gas spills. This is followed by Oklahoma, which has had 407 spills and is one of the largest net exporters of oil and gas in the country.

What Causes Spills?

Oil and gas spills actually have a surprisingly long history, with one of the earliest dating back to 1889, when a spill was reported on the coast between Los Angeles and San Diego.

Causes have consisted primarily of weather, natural disasters, equipment and technological malfunction, as well as human error.

However, they only became a widespread problem around the halfway mark of the 20th century, when petroleum extraction and production really began to take off. This era also saw the emergence of supertankers, which can transport half a million tons of oil but therefore make the risk of spills even costlier.

In fact, the biggest spill off U.S. waters after the Deepwater Horizon disaster is the 1989 Exxon Valdez spill in Alaska, when a tanker crashed into a reef and 11 million gallons of oil spilled into the Pacific Ocean.