2014 Jun 24, 9:23am
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The Obama administration has quietly cleared the way for the first exports of unrefined American oil in four decades, allowing energy companies to chip away at the long-standing ban on selling U.S. crude overseas.
Federal officials have told two energy companies that they can legally export a kind of ultra-light oil that has become plentiful as drillers tap shale formations across the U.S. With relatively minimal processing, oil shipments could begin as early as August, according to one industry executive involved in the matter.
Using a process known as a private ruling, the U.S. Commerce Dept.'s Bureau of Industry and Security is allowing Pioneer Natural Resources Co. of Irving, Texas, and Enterprise Products Partners LP of Houston to export ultra-light oil known as condensate to foreign buyers who could turn it into gasoline, jet fuel and diesel.
Both companies confirmed they had received the rulings.
Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself. The Administration's new approach, which hasn't been publicly announced, redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad.
The Commerce Department said the companies have improved the processing of the crude in a way that qualifies it for export, even though the oil wouldn't count as being traditionally refined. Exactly how the agency defines condensate and remains unclear.
The first shipments are likely to be small, but could ultimately encompass a lot of the 3 million barrels a day of oil that energy companies are pumping from shale, industry experts say, depending on how regulators define what qualifies for export.
The Brookings Institution estimates as much as 700,000 barrels a day could be available for export starting next year.
June 24, 2014 5:14 p.m. ET
Related: June 11, 2014 - Goldman Says Keeping U.S. Oil-Export Ban Helps Economy
Sell baby Sell!
You must be kidding.
With all due respect I'm not Mr. President.
But that's OK HE really isn't either.
So local gas prices could be set by what the global market will bear?
Hmmm, the US. produces about 10 million barrels/day and uses about 18 million barrels/day (crude oil in all it's forms) Does something seem fishy here? These is a scheme to drive prices up to make tight shale oils profitable as most producers are struggling to make a profit. It has very high front end production cost and very high depletion rates.
The chart in this article should put to rest any notion that we have "spare oil" to export. Data is from BP annual reserves/output data report.
Exports are part of a scheme to help raise prices for tight shale producers, which have high up front cost and very high depletion rates.