Key senator says U.S. office can lift part of oil export ban

WASHINGTON Wed Apr 2, 2014 6:36am EDT

U.S. Sen. Lamar Alexander (R), U.S. Sen. Lisa Murkowski (2nd R), and U.S. Sen. Judd Gregg (3rd R) talk after meeting with U.S. President Barack Obama and a bipartisan group of U.S. Senators to discuss passing comprehensive energy and climate legislation in Washington, June 29, 2010. REUTERS/Larry Downing

U.S. Sen. Lamar Alexander (R), U.S. Sen. Lisa Murkowski (2nd R), and U.S. Sen. Judd Gregg (3rd R) talk after meeting with U.S. President Barack Obama and a bipartisan group of U.S. Senators to discuss passing comprehensive energy and climate legislation in Washington, June 29, 2010.

Credit: Reuters/Larry Downing

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WASHINGTON (Reuters) - A U.S. government office has the power to approve exports of an abundant type of petroleum and help energy companies begin to partially bypass a 40-year ban on crude exports, according to a report released on Tuesday by Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee.

The ban on crude exports the government put in place after the Arab oil embargo of the 1970s includes a prohibition on exports of unprocessed condensate, a light petroleum that appears in oil reservoirs as a gas, but condenses to a liquid when it leaves the well.

The Bureau of Industry and Security (BIS), an office of the Department of Commerce, can simply modernize its definition of crude to exclude the condensates from the ban, according to the report called "License to Trade: Commerce Department Authority to Allow Condensate Exports." BIS has changed definitions of other types of petroleum for decades, it said.

"The definition of crude oil could simply be updated, aligning the regulatory architecture with the new supply mix made possible by technological advances," the report said.

"The Commerce Department has often modified its regulations without either congressional intervention or presidential finding, during both Republican and Democratic administrations," it said.

Thanks to advanced techniques, including horizontal drilling and hydraulic fracturing, the United States is suddenly one of the world's top three oil producers, along with Russia and Saudi Arabia, a development energy experts did not think was possible a few years ago.

U.S. energy trade will be debated at a hearing by a panel of the House of Representatives Committee on Foreign Affairs on Tuesday at 2 p.m. EDT. Murkowski and experts from the energy industry, a think tank, and academia are slated to testify at the hearing.

Supporters of lifting the crude export ban, such as Harold Hamm, the CEO of energy company Continental Resources Inc., have said it would add domestic jobs and strengthen oil security abroad. U.S. crude exports could help counter aggression by Russian President Vladimir Putin, Hamm testified last week in the House.

If condensate exports were allowed, it would be a small but important first step in opening U.S. oil sales to global markets. Exports of refined products like gasoline and diesel are already allowed. Condensate exports could reach between 100,000 and 300,000 barrels per day if the BIS grants licenses, Citigroup analysts said in a recent research note.

Lifting the ban on shipping unprocessed condensate overseas could help big producers like Apache Corp or EOG Resources Inc.

While pressure is building on President Barack Obama to lift the wider ban on crude shipments, few analysts think an outright reversal will come anytime soon.

The United States still imports much of its oil, so it could be a few years before it has so much that most companies will need to find new markets. And no major legislation to lift a ban exists, in part because few lawmakers in an election year want to support a measure that could be blamed for raising motor fuel prices.

A wholesale lifting of the ban could also raise the ire of environmentalists opposed to domestic drilling and emissions associated with crude.

Deborah Gordon, an energy and climate expert at the Carnegie Endowment for International Peace, will tell the House panel that the big question is not whether to lift the ban, but rather how the United States can balance the economy, energy security and global warming impacts of the new U.S. oil bounty.

(Reporting by Timothy Gardner; Editing by Matt Driskill)

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Comments (16)
tatman wrote:
the winners in a scenario where the ban is lifted: the koch brothers and energy/oil industry CEOs.

the losers: american consumers and the environment.

make no mistake about it: this will lead to a major spike in domestic fuel prices, with the cash hoards going right into oil company’s pockets, while gasoline prices spike upwards of $5 a gallon+.

we as a people are fools to think that the energy companies will take the massive stockpiles of cash and put them back into job creations. they are the most profitable companies in the world (next to apple), and they have not been rushing to create all those jobs they’ve been touting as of yet. meanwhile, they reap tens of billions in profit every year, mostly stored in offshore tax havens abroad.

america: do not buy into the propaganda from the republicans, tea party, and their owners (the koch brothers). we need investment into clean forms of renewable energy, not perpetuation of the oil industry.

this justification of using russia’s aggression as a manipulation tool is complete BS.

Apr 02, 2014 7:45am EDT  --  Report as abuse
LizR wrote:
So let’s see… it’s not really about “energy independence” for the American citizen after all, is it. It’s about independence from American law for the gas and oil industry. It’s about tinkering with balance of trade and jacking up profit margins.

The oil and gas industry (and its puppet, the Congress) will be trying to get the last barrel of fossil fuels out of the ground even as our grandchildren choke on the emissions from extracting, refining, transporting and burning the stuff, and wonder where they will find clean water to drink.

We need a Congress that will mandate reforms for how energy needs are met in the USA. We need a Congress that understands the best thing to do with fossil fuels is leave them in the ground and incentivize use of renewables including solar, wind and safer nuclear energy production, along with an updating of our national grid. That we have needed this –and the jobs that would accompany such an effort– since the 1950s says everything we need to know about the dependence of the US Congress upon fossil fuels. There’s no such thing as “energy independence” if we look at their track record!

Apr 02, 2014 7:57am EDT  --  Report as abuse
tatman wrote:
well said, liz. :)

Apr 02, 2014 8:46am EDT  --  Report as abuse
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