By Lynn Cook And Leslie Eaton
HOUSTON--American oilmen have seized on one solution to their
financial woes in the face of low oil prices: They want to export
U.S. crude oil. Soon.
Their new battle cry--Exports Now!--has echoed through the halls
and ballrooms here at the giant energy conference known as IHS
CERAWeek, even though such exports would require overturning a
decades-old federal ban on selling American crude abroad.
"The ban on crude-oil exports is a relic of another time," John
Hess, chief executive of Hess Corp., told the gathering. "Our
neighbors Canada and Mexico produce oil and export it. Why not the
U.S.?"
One of the campaign's most optimistic supporters, Harold Hamm,
the founder and majority owner of Continental Resources Inc.,
predicted that Washington could lift the export ban "perhaps before
the year is out."
Jack Gerard, head of the American Petroleum Institute, the
energy industry's lobbying arm, was more circumspect. Support for
exports is building, he said, but "it's difficult to put a timeline
on it."
Exporting American oil is such a new cause for U.S. energy
companies that the idea was scarcely mentioned a year ago at the
conference, which draws executives and energy ministers from around
the globe. Back then, oil prices were marching toward $100 a
barrel, and the U.S. was breaking energy production records every
week.
Those days are over because of a global glut of oil, partly
because of American companies' success in wresting crude oil from
shale formations. U.S. oil prices have fallen by half, to around
$56 a barrel, since their peak last June, and the number of
drilling rigs in the U.S. has also been cut by 50%.
Earnings have suffered as U.S. oil companies have slashed their
drilling programs to the tune of billions of dollars. They have
demanded, and gotten, steep price cuts from the specialist
companies that help them drill horizontal wells and free oil and
gas through hydraulic fracturing. Consultants from IHS, which
sponsors the conference, said they think fracking costs are down
about 32%.
But that hasn't been enough to keep oil production, and so
revenues and earnings, growing. Meanwhile, Saudi Arabia has refused
to turn off its taps, helping to flood the global oil market.
"We cannot grow U.S. supply at $60 [a barrel]," said Scott
Sheffield, chief executive of Pioneer Natural Resources Co. "Saudi
Arabia does not want us to grow."
America has had a ban on virtually all crude-oil exports since
the 1970s. Congress imposed it in the wake of the Arab Oil Embargo,
which caused fuel shortages and long lines at gas stations across
the country.
Because U.S. oil can't be sold abroad, it is trapped inside the
U.S., where storage tanks are full to the brim because refiners
can't use it fast enough. Its price has languished, compared with
the global price for oil, which is almost $7 more a barrel more
right now.
If only they could sell their oil overseas and capture that
extra few bucks a barrel, industry executives say, U.S. producers
could go back to pumping more crude.
The appetite for oil from the Americas has been growing as
countries in Europe and Asia try to wean themselves off crude
pumped in the Middle East. South Korea has been buying limited
amounts of ultralight oil from the U.S. since last summer, when the
Commerce Department approved the export of a certain type of shale
oil. The country started importing oil from Mexico last month, and
has brought in a few test cargoes from Canada, too.
"We've shifted the oil market's center of gravity to North
America," said Ryan Lance, chief executive of ConocoPhillips,
speaking to a packed audience at the conference.
Sen. Lisa Murkowski, an Alaska Republican, told the assembled
executives that she would introduce legislation later this year
that would fully repeal U.S. oil export ban. The U.S., she said,
shouldn't lift sanctions on Iran--a move that could put an extra 1
million barrels a day of Middle East oil on global markets--while
continuing to prohibit crude exports from Texas, California and
North Dakota.
"To me, this equates to a sanctions regime against ourselves,"
Sen. Murkowski said.
But after her speech, she acknowledged that lifting the ban
could be tough. One reason: No one in Congress wants to be blamed
if gasoline prices climb.
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