(Reuters) - U.S. officials have told
energy companies that they may export a variety of ultra-light oil if it has
been minimally refined, an apparent marginal loosening of a decades-old ban on
selling U.S. crude abroad.
The U.S. Department of Commerce's
Bureau of Industry and Security told Pioneer
Natural Resources Co that
putting light oil, known as condensate, through a stabilizer was sufficient
processing to qualify it as a refined product, eligible for export without a
license.
"The stabilization process at
Pioneer's Eagle Ford Shale central gathering facilities involves a distillation
unit that lowers vapor pressure and removes volatile lighter
hydrocarbons," Pioneer said in a statement. This process qualifies the
crude as a product that can be exported, Pioneer said.
The Wall Street Journal previously
reported that the Department of Commerce, which has come under growing pressure
to ease restrictions amid a resurgence in domestic production, had given
approval via a private ruling to Pioneer and Enterprise Product Partners LP to
export the so-called condensate. Enterprise didn't respond to requests for
comment.
A Commerce spokesman did not comment
on the specific rulings but told Reuters that there had been "no change in
policy" toward crude oil exports, a topic that has emerged as one of the
most contentious energy policy issues this year.
Condensate may be exported if it has
been run through a distillation tower, a type of refining unit, because the
process "results in the crude becoming a petroleum product (that) is no
longer defined as crude oil," said
Commerce spokesman Jim Hock. Refined products such as gasoline and diesel are
not restricted.
"Existing statutes provide both
specific restrictions and allowances regarding crude oil exports," Hock
said. Some energy experts also agreed that the ruling appeared consistent with
existing interpretation of the 40-year-old law.
Still, U.S. oil prices rose more
than $1 to $107.05 a barrel after the report, highlighting the intensifying
scrutiny of a gray area in regulations that prohibit export of condensate that
has been produced directly from an oil field but allow it if the same type of
oil emerges from a natural
gas plant or a
refinery.
ASIAN BUYERS
Energy-hungry Asian countries, which
get most of their oil from the Middle East, would welcome extra U.S. supplies.
Three new condensate splitters, a type of refinery, are due to open this year
in the region able to process a total of 350,000 barrels per day.
Some oil traders in Asia, however,
predict it will be a few years before U.S. supplies hit the market, given the
time needed to pin down details such as specifications and freight costs.
Reuters reported in May that U.S. oil producers, including Pioneer, had met
with the Department of Commerce's Bureau of Industry and Security (BIS), which
oversees exports, and were hopeful of some form of easing on condensate
limitations.
The U.S. shale oil boom of recent
years is expected to soon make the country the world's top crude producer, surpassing
both Saudi
Arabia and Russia.
It has also led to a glut of light oil in Texas and Louisiana that is difficult
to process there because refiners have invested billions of dollars to process
heavier oils from Mexico and Venezuela.
Some ultra-light oil could be
reclassified as fuel after it has been minimally processed, putting it in a
regulatory gray area that has been seen by some export backers as a way to ease
the ban on exports.
Senator Lisa Murkowski, a Republican
from Alaska, said the move on condensate was "a reasonable first step that
reflects the new reality of our energy landscape."
Murkowski, the top Republican on the
Senate Energy Committee, urged the White House to fully lift its ban on crude
oil exports.
A Senate aide said the shipments
that will be allowed are limited because they are "stabilized"
condensates, or crude that has been processed to remove light ends like butane
gas so that it can be sent through pipelines for shipping.
It was not immediately clear how
much condensates the companies would be able to ship though exports could begin
as soon as August. Pioneer Chief Executive Officer Scott Sheffield said in
March that recent U.S. oil production includes some 800,000 barrels per day of
condensate.
Congress is not expected to pass
legislation lifting the ban on crude exports before the Nov. 4 elections, as no
lawmaker wants to be blamed for a move that could boost U.S. oil prices.
Senator Edward Markey, a
Massachusetts Democrat, blasted the export approvals saying it puts America on
a "slippery slope" to send more oil abroad when the Middle East is in
disarray and tensions are high with Russia.
"Congress put this oil export
ban in place. It should be Congress that decides when and how to change it, not
through a private ruling by the Commerce Department without public
debate," he said. (Reporting by Ros Krasny, Timothy Gardner and Valerie
Volcovici; Editing by Sandra
Maler, Cynthia
Osterman, Lisa Shumaker, Jessica Resnick-Ault and Lisa Von Ahn)
Culled from http://www.reuters.com/
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