U.S. Lifts The Ban On Crude Oil Exports: When Might It Matter For Producers?

The attached article explains this better than I could.

But the bottom line is that the answer to the question is complicated and the full answer won't be known for some time.

However, the outlook is positive.

http://www.forbes.com/sites/woodmackenzie/2016/01/19/us-lifts-the-b...

By Skip York

With the removal of the ban, we might see a few cargoes of crude oil shipped to a variety of new destinations. These will be ‘test cargoes’ as US crude oil producers build their international supply chains. ConocoPhillips and NuStar Energy loaded the first cargo after the ban was lifted (just beating Enterprise Product Partners to the honor) are examples of such test cargoes. There are press reports that Sinopec has bought a cargo to be loaded in March and even that crude oil might be exported from the Alaskan North Slope (ANS). ANS has been exportable for decades, but it rarely leaves given how valuable the crude is on the US West Coast. The change now is the Alaskan exports could now use an international vessel, which is much cheaper than the previously required US Jones Act vessel.

As oil prices recover, we expect growth of US crude oil production to return fast enough to eventually widen the Brent-LLS price differential enough to make US crude oil exports viable. Based on our current oil market outlook, it could take several years for the US crude oil export window to open.

AND

US crude oil exports could increase US influence in those countries that buy the crude oil, especially those that have not taken US product exports before. Wood Mackenzie expects US crude oil exports to compete in Asia with the Middle East, Russia and Africa. Asia is a highly competitive market for a number of crude oil qualities from various producing regions so it is not clear what degree of political influence the US may gain from these exports to the region.

Combined with Cheniere loading its first LNG export cargo from its Sabine facility later this spring, the US is shifting from the world’s largest petroleum importer to a growing exporter. In less than five years, that concept has gone from the ridiculous to reality. This doesn’t mean the US will be energy-isolated from the world. In fact, the role the US plays in the energy world will become increasingly integrated and complicated. Interesting times indeed.

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Permalink Reply by Joseph-Ohio on January 22, 2016 at 12:33am

Just to be most clear :

I'm 'Jake' with lifting the ban on exports - always have been - but, that doesn't mean (to me anyway) that we should do business with any old foreign state that may then use our own resources against our own sovereign interests (including our population's security / well being / economy / very existence).

Catch my drift ?

Still need common sense regulation / penalty applied to abusive / offending foreign flags.

I have always and will continue to call the favored customers 'vetted allies'.

That designation would (and ought to be) very easy to lose should even a hint of offensive behavior / hostility / aggression / malevolence / etc. on behalf of any customer manifest itself.

Just 'Common Sense'.

JMHOs

Permalink Reply by Barry D on January 22, 2016 at 3:36am

Joseph,

I catch your drift.

However, it is a world market and U.S. companies are free to trade where they will. Except of course companies in countries where trade is banned by U.S. government action, i.e. North Korea.

So, American companies will be dealing with companies in countries that may not be the best friends of the U.S., i.e. China.

The up side to this is that it will give us a political tool, as you have cited.

All in all, the lifting of the export ban should have positive effects here in the Utica and Marcellus development areas. Those effects may take some time to develop and may not be obvious at first.

I just wanted to post something positive to offset all the negativity on this site.

Permalink Reply by Joseph-Ohio on January 22, 2016 at 3:52am
I'm reading ya'.

I don't think or want to come off all negative on it either and if you read what I've written I don't think I have.

I do want to come off as 'sensible' however.

Bottom line for me would be to enter only common sense trade agreements with what I would call 'vetted allies'.

That's positive enough for me - and not really negative at all - unless the customer doesn't pass muster as being a 'vetted ally'.

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