Saturday - Jul 22, 2017

US to begin exporting oil for the first time in forty years


US to begin exporting oil for the first time in forty years

The way has been cleared for the first time since the global oil crisis of 1973 for exports of unrefined American oil to get underway, ending the long term ban on selling U.S. oil abroad.

Initially, the US Commerce Department has granted permission to just two oil companies, Pioneer Natural Resources of Irving and Enterprise Products Partners of Houston, both in Texas, to ship “condensate”, a type of ultralight oil which can be converted into gasoline, jet fuel and diesel.

While shipments of condensate could get underway within the coming months, initially they will be far from being massive in quantity, and will be restricted to these companies, who draws the condensate from the shale from the Eagle Ford Shale formation situated in the south of Texas.

With the US government having granted approval to these two companies, expectations are that similar requests are likely to begin to flow in any time now, with the US Commerce Department reported to be in the throes of preparing industry designed to make it a simple process for all production companies to resume the export activities.

Current legislation which has been in place since the Arab oil embargo of the early to mid 1970s, which caused oil prices to quadruple and led to rationing at gas stations across the U.S. Since then, U.S. all production Companies have been disallowed from exporting crude oil except in exceptional circumstances, and then requiring a special license, although they can export refined fuel such as gasoline and diesel, despite the prices that they could offer were never really competitive.

However, the situation has changed since drilling companies began to tap into huge shale formations that have been discovered across the U.S., with so much oil is flowing from them that prices for ultralight oil have fallen as much as $10 a barrel below the price of crude oil, causing the US government to relax the export ban, pointing to the fact that they can now enjoy higher prices from foreign buyers than they are currently picking up from US refineries.

According to industry analysts, estimates are that from the beginning of next year export levels could reach as high as 700,000 barrels of ultralight oil daily, with these levels gradually rising to become a substantial percentage of the three million barrels a day of oil that energy companies are currently pumping from shale.

Between the years 2011 to 2013, U.S. oil output soared by 1.8 million barrels a day, with 96% of production coming in the form of ultralight oil, according to statistics recently released by the US Energy Information Administration.

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