| HOUSTON, March 4
HOUSTON, March 4 If the United States does not
lift a decades-old crude export ban, oil producers could slowly
cut back on output, the chief operating officer of Continental
Resources Inc said on Tuesday.
The impact of production growth with only very limited
access to global markets under the ban will keep crude prices
depressed. Cutbacks in output would gradually emerge, said Rick
Bott, president of Continental. The oil and gas producer is a
major player in North Dakota's Bakken shale fields.
"It may be death by a thousand cuts," he said during a panel
discussion of oil logistics at the annual IHS CERAWeek energy
conference in Houston.
He said producers are already seeing impacts of what he
called steep backwardation in the U.S. oil market, where current
prices are higher than those in the future.
"We're already having an impact on upstream I believe. It
certainly will next year and it will the year after," Bott said.
Discussion of possibly lifting the crude export ban, which
was imposed in the 1970s in response to the Arab oil embargo,
has largely dominated the conference, an annual gathering of top
executives from energy companies throughout the world.
The U.S. shale oil revolution has fueled such talk, as U.S.
output is soaring, so much that many refiners no longer import
light sweet crude to their U.S. Gulf Coast plants.
Some experts say the boom will not last, as shale wells have
high decline rates shortly after production starts. However,
Bott challenged that view, saying that while initial decline
rates may be steep, production will continue at lower levels for
a long time.
"It has a really long tail," he said. "It's that tail you're
While producers such as Continental could benefit from
higher crude prices if U.S. oil were exported into the global
market, refiners could pay higher prices for crude they process,
cutting into profits.
The chief executive officer of a 330,000 barrel-per-day
refinery in Pennsylvania that buys one-fourth of all Bakken
crude production said any decision needs much study.
"That crude, elsewhere in the world, is more valuable and
they want to take the crude up to that value," said Philip
Rinaldi of Philadelphia Energy Solutions. "The biggest mistake
we could make right now is to go and do an immediate lifting of
Rinaldi said Bakken producers have declined to sign
long-term contracts with his refinery, saying they would prefer
to sell on the spot market so they can capture price increases.
That demonstrates that the U.S. crude market is not yet
saturated, he said.