Home' Trinidad and Tobago Guardian : June 29th 2014 Contents SBG20 INTERNATIONAL
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JUNE 29 • 2014
The US could allow about
750,000 barrels a day of light
crude oil to be exported, based
on a new government stance
defining what qualifies for
Producers, refiners and pipeline companies
are questioning exactly how much the Obama
administration has relaxed its position on crude
exports after the Commerce Department said
June 24 it had categorised some lightly
processed oil as exportable. The US has pro-
hibited most crude exports for four decades.
About 750,000 barrels a day of oil produced
from US shale plays is an ultra-light variety
known as condensate, said Michael Woj-
ciechowski, head of Americas downstream
research for Wood Mackenzie Ltd.
More than 70 per cent of US condensate
comes from the Eagle Ford shale formation
in Texas, where the majority of it goes through
a heating process to burn off certain gases,
Amrita Sen, chief oil economist for Energy
Aspects Ltd in London, said by phone.
The Commerce Department gave permission
for condensates to be exported after going
through the process, known as stabilizing,
because then it can be considered a refined
product. Though most raw crude oil exports
are banned, refined products can be shipped
abroad without limits.
Stabilisers at oil fields along the US Gulf
Coast may have a combined capacity of more
than 200,000 barrels a day, according to Eric
Lee, a commodities strategist for Citi Research.
"Processed condensate exports could begin
as early as August," Lee said in a research note.
The US could export 300,000 barrels of con-
densate per day by the end of the year, accord-
ing to another Citi note.
Oil producers and refiners were unsure
whether other types of crude might also qualify.
Far more crude might be eligible for overseas
shipments if any type of stabilised oil can
qualify as a refined product, since the practice
is widespread in the industry, said Charles
Blanchard, an analyst for Bloomberg New
Oil producer BHP Billiton Ltd said it wel-
comed the approval of condensate exports
"under limited circumstances.
BHP Billiton will consider marketing oppor-
tunities that may apply to our condensate
production in the Eagle Ford and Permian
Basin," Jaryl Strong, a BHP spokesman, said
in an e-mailed statement.
As the industry figures out how to define
the new rule, "that ll really help companies
on the downstream side better understand
business opportunities and business impacts,"
Dean Acosta, a spokesman for refiner Phillips
66, said by phone.
Producers are keen to find additional markets
for crude as output from US shale formations
has surged, causing bottlenecks in some
Refiners that have benefited from access to
oil at prices below the international benchmark
saw their shares drop yesterday after the Com-
merce Department change was announced.
The US produced almost 8.4 million barrels
a day in May and annual output is forecast
to reach 9.3 million barrels a day in 2015, the
highest since 1972, according to the Energy
More than 80 per cent of the Eagle Ford s
output goes through stabilisers, Energy Aspects
Sen said. Pioneer Natural Resources Company,
one of the companies that asked the govern-
ment for permission to export stabilised con-
densate, said last week that a large portion of
its 43,000 barrels a day of Eagle Ford pro-
duction is condensate that already undergoes
Stabilisers are relatively simple pieces of
oilfield equipment sometimes positioned near
wellheads. They heat oil enough to boil off
some gases, separating those products from
the rest of the crude mix, Blanchard said.
"A caveman could do it," Blanchard said,
comparing the process to heating oil in an
The process is commonly performed before
putting oil and condensate into pipelines. Sta-
bilising oil is far less complex than the process
of splitting or refining crude, which involve
more sophisticated devices that heat and sep-
arate fuels from oil. Stabilisers that qualify
crude for export can cost as little as one-tenth
that of more complex processing units, said
Wojciechowski at Wood Mackenzie.
US oil export shift prompts
fresh look at shipments
More than 70 per cent of US condensate comes from the Eagle Ford
shale formation in Texas, where the majority of it goes through a
heating process to burn off certain gases
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