By Lynn Cook
For the first time in 40 years, ships full of unrefined American
oil are sailing from Texas to ports in Europe and Asia. This year,
the new trade routes should provide a relief valve for the swelling
glut of U.S. crude.
The Wall Street Journal reported last June that two Texas energy
companies, Enterprise Products Partners L.P., a pipeline company
based in Houston, Pioneer Natural Resources Co., an oil producer
based in Dallas, received special permission from the Commerce
Department that allows them to sell ultralight oil to foreign
buyers without sending it to a traditional refinery. With only a
few exceptions, that hadn't been possible under a federal
oil-export ban that dates back to the 1970s Arab oil embargo.
Other energy companies are testing the export waters on their
own without explicit approval from the government for such sales.
So far, roughly 3 million barrels of ultralight oil have been
loaded onto tankers leaving Texas, and the energy industry expects
that figure to grow in 2015.
Signs that the U.S. is starting to export its glut of oil is one
of the factors that has sent global oil prices sliding by almost
50% to levels not seen since the most recent recession. U.S. crude
prices also have tumbled to under $60 a barrel.
Whether they will rebound in 2015 is a question that has split
energy analysts. Those who say China's economy is becoming less
focused on manufacturing expect crude to languish in the $60 range,
while a few optimists expect cheap oil to spur demand and are
predicting a rebound to $90 a barrel.
As much as 80 million barrels of ultralight oil might leave the
U.S. this year from the Eagle Ford Shale in South Texas, if prices
stay competitive, said Sandy Fielden, energy analyst with RBN
Energy LLC. Significant amounts of the oil pumped in West Texas,
Oklahoma, North Dakota and even Colorado could also qualify for
export.
Energy companies, including Pioneer, continue to lobby Congress
for a full lifting of export restrictions. Supporters argue such a
move would help create jobs and improve the trade deficit, but
opponents question the wisdom of shipping American oil overseas
while the country is still a major importer and consumer of foreign
crude.
Al Troner, president of Asia Pacific Energy Consulting, said as
more companies export ultralight American oil, it could take market
share from big energy-exporting nations. "Exports are not derailed
with this current price situation," he said. "Ultimately only one
region has the size, technology and capital to challenge the Middle
East for the energy future of Asia-Pacific and that is North
America led by the U.S."
Write to Lynn Cook at lynn.cook@wsj.com
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