A lot of press this week about a "lifting" of the crude oil export ban in the U.S.
The buzz was prompted by news that the U.S. Commerce Department has granted special permissions to two exporters: Pioneer Natural Resources and Enterprise Products Partners. Allowing them to ship volumes of hydrocarbons to overseas customers.
The move was certainly unexpected. And does have some far-reaching possible implications for the North American oil patch.
But the key word is "possible".
That's because, in reality, the rules haven't changed all that much. With this week's announcement being more of a regulatory tweak than a full-out reversal of policy.
The ruling issued by the Commerce Department covers a specific type of hydrocarbon called condensate. A "lighter" liquid--meaning one that contains more carbon and hydrogen molecules than regular crude oil.
Condensate is produced from many natural gas wells across North America. It can then be refined into petroleum products like jet kerosene, the same way that crude is.
The thing is, up until now condensate was included in the blanket ban on exporting unrefined hydrocarbons. Producers couldn't ship condensate overseas unless it had been run through a processing plant to turn the raw stuff into component petroleum products.
But it appears that this week's ruling has changed that. By subtly shifting the definition of a processing plant.
Word is that condensate will now be considered "processed" even if it doesn't undergo full-blown treatment. As long as these hydrocarbons pass through an apparatus known as a "stabilizer"--a piece of equipment common at well heads, which purifies condensate coming out of the ground. In order to transport it through local pipelines.
Stabilizers are much simpler and more common than full blown condensate processing plants. In fact, many oil and gas fields already have stabilizers in place to aid their day-to-day operation.
This week's ruling thus opens the door to wider range of condensate being considered "allowable for export". But that's the extent of it. The news still doesn't affect true crude oil--which remains under export ban.
It's also important to bear in mind this is an exemption granted to only two companies so far. It will be critical to see if the Commerce Department extends the same rules to other firms. Or if this is a simple a "test case" to toe the waters.
Here's to a crude understanding,
By Dave Forest