NEW YORK — Companies are taking advantage of new ways to export oil from the U.S. despite government restrictions, and in the process helping the U.S. become an ever bigger exporter of petroleum on the world stage.
The Obama Administration has opened the door to more exports — without changing policy — by allowing some light oils to be defined as petroleum products like gasoline or diesel, which are not subject to export restrictions.
Although U.S. production has boomed in recent years, the nation still consumes far more crude oil than it produces and remains heavily dependent on imports. But the crude being produced by U.S. drillers in recent years includes types of oils that don’t have a big market here. This has the oil industry and some politicians calling for an end to crude export restrictions, which were adopted after the 1973 Arab oil embargo.
Economists generally agree that lifting the restrictions would benefit the U.S. economy, but the ban remains a touchy political subject because of the fear — unfounded, most analysts say — that lifting the ban on exports will raise gasoline prices for U.S. drivers or compromise U.S. energy security. Most experts believe the restrictions will not be overturned this year because of the coming midterm elections.
In the meantime, companies have searched for ways to reach overseas buyers. Oil companies are increasingly exporting crude to Canada with special licenses from the Commerce Department. Other types of light oils known by names such as “diluent” and “condensate” are — or will soon be — finding their way overseas.
The Energy Department reported earlier this month that U.S. crude exports reached 268,000 barrels per day in April, its highest level in 15 years. Last year the nation exported a record 2.7 million barrels of fuels per day, making the U.S. the world’s largest exporter of gasoline, diesel and other fuels.
When an ultra-light oil called “lease condensate” comes out of the ground it is considered crude by regulators. But companies must run the substance through distillation equipment that removes dissolved gases in the oil and stabilizes it for transportation through a pipeline. It then becomes something called “processed condensate.”
The industry and regulators have also considered this a type of crude, because it must be further refined to be used to make chemicals or fuels, and it is not currently exported.
But the Commerce Department, in response to inquiries from Pioneer Natural Resources and Enterprise Products Partners, said that the processing required to prepare the oil for transport is enough to allow this process condensate to be considered a petroleum product, and therefore eligible for export without restriction.
Pioneer said Wednesday that the ruling, which is not public, “Confirmed our interpretation that the distillation process … is sufficient to qualify the resulting hydrocarbon stream as a processed petroleum product eligible for export without a license.”