- POSTED: 25 Jun 2014 08:00
The US will allow two companies to export unrefined oil for the first time in four decades, taking steps to break a ban on crude exports, The Wall Street Journal reported.
WASHINGTON: The US will allow two companies to export unrefined oil for the first time in four decades, taking steps to break a ban on crude exports, The Wall Street Journal reported on Tuesday.
The Commerce Department will permit the two Texas-based companies to export the ultra-light condensate, which has grown in supply on the back of the boom in fracking-based exploration and production of natural gas.
"With relatively minimal processing, oil shipments could begin as early as August, according to one industry executive involved in the matter," the Journal said.
Pressure has been building for a year for the government to end the 1970s ban on exports, an energy security measure long seen crucial in a country heavily dependent on oil imports to meet domestic needs.
But the surge in production from shale-based deposits in areas like North Dakota and Texas, made possible by advances in hydraulic fracturing technology, has sharply reduced the need for imports and created regional surpluses due to distribution bottlenecks.
That has given rise to industry pressure to allow exports from areas like the Gulf of Mexico, even as the country imports crude through east coast ports.
Some resistance has come from refiners and consumer advocates who fear that competing with export markets for the crude could drive up their prices, and eventually raise the cost of fuel to consumers.
Still, despite pressure in Congress and from the industry, the ban on crude exports has not been lifted. The Commerce Department instead made a special ruling to allow the export of condensate on the grounds that it has been processed enough to qualify it for export, even if it has not been refined.
The US already exports large volumes of refined oil products.
The Journal said the two companies receiving permits to export condensate are Pioneer Natural Resources of Irving, Texas, and Enterprise Products Partners of Houston.