(November 4, 2014 – Wall Street Journal) New Oil Shipment Shows Cracks in Export Ban (By: Christian Berthelsen)
A major energy company will soon sell U.S. oil abroad without explicit permission from the government, another sign that the decades-old federal ban on crude exports is crumbling.
BHP Billiton ’s deal to sell about $50 million of ultralight oil from Texas to foreign buyers without formal government approval is likely to be only the first of many such moves as energy companies seek new markets and higher prices for the surge of crude now pumped in the U.S.
Washington has been sharply divided over whether to allow U.S. oil exports, which have been restricted since the Arab oil embargo in the 1970s. Big oil companies includingExxon Mobil Corp. have called for an end to the ban, saying that overseas sales would create U.S. jobs and improve the balance of trade.
Read the full story here: http://online.wsj.com/articles/bhp-to-sell-texas-oil-overseas-without-fo...
For nearly 40 years, the U.S. has allowed exports of refined fuel, such as gasoline and diesel, but not overseas shipments of oil itself except in rare cases. Even those, including limited crude sales to Canada, have required a special permit.
As The Wall Street Journal reported in June, two Texas energy companies received confidential rulings from the department that allowed them to export a lightly processed version of condensate even though it hadn’t been handled by a refinery. Industry experts said the rulings spelled out what companies needed to do to the oil to qualify it as a fuel that can be exported. People in the industry have predicted that other companies would adopt such methods.
That is what BHP is doing, without waiting for a government ruling. “We took the necessary time to thoroughly examine the issues involved and ensure the processed condensate was eligible for export,” the Anglo-Australilan company said.
About 1.6 million barrels of light U.S. oil have been exported since the Commerce Department rulings, with additional cargoes planned through year-end. Exports remain a tiny fraction of U.S. oil output, which has risen to nearly 9 million barrels of oil a day, according to the U.S. Energy Information Administration. Imports account for the rest of the nation’s daily consumption of 20 million barrels a day.
“This is the door opening one more crack and we’ll see what happens next,” said Rusty Braziel, who runs consulting firm RBN Energy LLC He said prices overseas would have to be much higher than in the U.S. to justify the shipping costs. “I’m not sure the economics are even there right now to open the floodgates,” he said.
