Share

POLITICS: PennAve

How Obama gave hope to supporters of oil exports

By |
Commerce,Energy Department,PennAve,Energy and Environment,Fracking,Zack Colman,Oil,Ernest Moniz,Lisa Murkowski,Oil Exports,Shale

Supporters of ending a ban on crude oil exports said the Commerce Department's quiet decision to allow a pair of companies to send abroad minimally processed, ultra-light oil known as condensate was a good first step, but nothing more.

"Was it anything to write home about? Hey, it was a first step. And I think it should be recognized that it's a first step because we've got to start taking some steps," said Sen. Lisa Murkowski, R-Alaska, a chief advocate of ending the 39-year-old restrictions and the top Republican on the Senate Energy and Natural Resources Committee.

The Commerce decision, first reported Tuesday by the Wall Street Journal, was in response to a petition by Pioneer Natural Resources Co. The Commerce Department said the company could lightly process the condensate to remove lighter gases that make it unstable and then export it, rather than send it to a refinery first.

Some said the move signaled that the Obama administration is seriously looking at revising its policy on crude oil exports.

"We're pleased the administration is paying attention to the issue and urge policymakers to fully lift the restrictions that are limiting America's potential as an energy superpower," said Zachary Cikanek, a spokesman for the American Petroleum Institute.

But Energy Secretary Ernest Moniz, in brief comments to reporters following a League of Conservation Voters-hosted event in Washington, downplayed the potential for a major change in export policy.

"But I think the thing to keep in mind, which I've also said, and said to the oil companies, is that, you know, we still are very major oil importers. And that should be kept in context," Moniz said Wednesday.

The restrictions were created to enhance U.S. energy security in the wake of the 1970s Arab oil embargo. Small amounts of unrefined crude trickle abroad with special permits, but the permits are few in number.

The recent debate over the crude export policy is largely the result of a domestic drilling boom led by hydraulic fracturing, or fracking, in shale plays in Montana, North Dakota, Texas and elsewhere. Between 2008 and 2013, U.S. production spiked 49 percent, according the U.S. Energy Information Administration.

Light, sweet crude has accounted for most of that increase, creating a problem for U.S. producers because refineries are equipped to process heavier crudes. Export supporters have pushed a change in policy to eliminate that "mismatch," which Moniz and other administration officials have said the White House is considering.

To be sure, Commerce said it had not changed its policy on exporting condensate or crude oil. The move was more a clarification than anything else, said Charles Drevna, president of refineries group American Fuel and Petrochemical Manufacturers.

"I believe the press stories and the market reaction has far outweighed the significance," he said.

Bill Day, a spokesman for Valero Energy, the world's largest independent refiner, said the Commerce move wouldn't compel the San Antonio-based company to drop plans to build refineries that can process light crude.

"I think it's important to note that the Commerce Department issued a statement saying that there has been no change in policy on crude oil exports," he said in an email.

Not everyone on Capitol Hill saw it that way. Sen. Ed Markey, D-Mass., called it a "slippery slope," and said only that Congress should have the authority to remove export restrictions because it established them in the first place.

"We should keep our resources here at home for American families and businesses, not send this oil abroad even as we import oil from dangerous regions of the world," he said.

The issue doesn't cut neatly across party lines, though. Some House Republicans have expressed skepticism about sending oil abroad out of energy security reasons.

View article comments Leave a comment