Oil industry news is awash this week with reports that the Obama administration has effectively abolished a four-decade-long ban on US crude oil exports, but a closer look at the deal that’s got everyone so excited makes for a less sensational headline.
According to the Wall Street Journal, in two separate rulings, the US Commerce Department has granted permission to Pioneer Natural Resources Co. and Enterprise Products Partners LP to export ultralight condensate oil.
The devil is in the details, as he so often is, and the trick is in the type of “crude”. What the Commerce Department is allowing these two companies to do is export unrefined crude oil from the Eagle Ford shale formation in Texas.
This unrefined crude oil is ultralight crude, or oil condensate, which has undergone a stabilization process for safe transportation and storage. Because of the stabilization process, this ultralight crude can be considered a refined petroleum product, for which there are currently no limits on US exports.
So they haven’t lifted the ban, per se, they’ve just found a loophole.
It may not be the oil export coup the industry was gaming for, but it’s still good news. The shale boom has led to a surge in the production of ultralight oil but prices for condensate and domestic crude have been kept far below Brent crude because of the export ban.
Related Article: What New Oil Export Laws Really Mean
In the natural gas side of this equation, the US House on Wednesday passed a bill aimed at speeding up applications for exported liquefied natural gas (LNG).
The bill, introduced by Rep. Cory Gardner (R-Colorado), would essentially reduce the timeframe for approval of LNG exports to non-free-trade agreements countries from the US Department of Energy to 30 days—down from 90 days.
The Obama administration has been coy about the process, noting that the procedure for approving applications that is currently in place is secondary to the fact that LNG export facilities in the US wouldn’t be ready to start exporting until 2018 regardless.
Still, it’s good news for Ukraine, which is hoping to be able to get its hands on US LNG at some point in its tenuous energy future—a topic that took center stage during last week’s energy forum in Kiev.
Oilprice.com was on the ground for the Adam Smith Ukraine Energy Forum in Kiev last week. Be sure not to miss our upcoming study of LNG for Ukraine next week, and special interviews with key figures on the Kiev energy scene.
Announcement: We have just launched a free service that could be of huge interest to you. Our researchers have taken the newsfeeds of every oil & gas company traded in the major exchanges in the U.S., Canada, UK & Australia and created a very easy to use webpage that shows all of these results as soon as they are released. It’s incredibly easy to use and allows you to select the exact exchange or country you are interested in: https://oilprice.com/oilcompanynews (Check it out)
By. James Stafford of Oilprice.com