(June 25, 2014 – USA TODAY) Companies 'work around' U.S. oil export ban (By Wendy Koch)
Companies and federal officials are finding a way around a 1970s-era U.S. ban on crude oil exports by slightly processing some of the rising amounts of oil extracted from the nation's shale deposits.
Read the full story here: http://www.usatoday.com/story/money/business/2014/06/25/companies-work-a...
Companies such as Pioneer are investing in facilities, typically known as "splitters," that minimally process ultralight oil by boiling it and splitting it into various components such as naphtha, which can then be used to make gasoline and other petroleum products.
Kinder Morgan is building a condensate splitter in the Houston ship channel that's scheduled to open in November, and other companies including Magellan and Martin Midstream, have announced plans to construct similar facilities along the Gulf Coast.
"It could be viewed as a work-around" of the U.S. export ban on crude oil, says Sandy Fielden, analyst at RBN Energy, a Houston-based consulting firm, adding that the result is a "semi-finished product." He says the U.S. rules on oil exports are "wide open to interpretation."
He says the Commerce rulings are the first that he's aware of allowing the export of condensate.
Fielden says companies are investing in splitters because Gulf Coast refineries are best suited to refine heavy crudes — not the light or ultralight oil that hydraulic fracturing, or fracking, is extracting from shale formations nationwide.
The impact of Commerce's ruling could be significant. Light and ultralight oil account for a huge share of the recent growth in U.S. oil production, making up 96% of the 1.8-million barrel-per-day increase from 2011 to 2013, according to the Energy Information Administration. The EIA's new crude oil forecast indicates the supply of light oil will continue to outpace that of medium and heavy crude through 2015, accounting for more than 60% of production growth.
RBN Energy says U.S. production of ultralight oil or condensate doubled from 494 million barrels per day in 2011 to 1.05 billion barrels per day in 2013. It forecasts that number to reach 1.62 billion barrels daily in 2018.
