The U.S. Department of Commerce's Bureau of Industry and Security (BIS) on Tuesday provided guidance on petroleum product exports, officially clarifying that lightly processed condensate can be exported.
On the "FAQ" section of its website BIS said that lease condensate -- including lease condensate produced from tar sands, gilsonite, and oil shale -- is defined as crude oil in Section 754.2(a) of the Export Administration Regulations (EAR) and subject to regulation.
Export of most domestically produced crude oil is forbidden under a 40-year-old ban (see Shale Daily, Jan. 23).
"However, under 754.2(a), lease condensate that has been processed through a crude oil distillation tower is not crude oil but a petroleum product," BIS said. "Petroleum products are subject to few export restrictions. Those unsure whether their lease condensate has been processed sufficiently to be considered a petroleum product eligible for export may request a formal Commodity Classification from BIS, in accordance with the procedures described in EAR Section 748.3."
Last June BIS told Pioneer Natural Resources Co. and Enterprise Products Partners LP that they may export condensate under existing regulations (see Shale Daily, June 25). That guidance was given in private rulings that were not publicly disclosed and since that time the energy industry had sought greater clarity on the regulatory intentions of BIS with regard to exports.
The latest move by BIS might be seen as encouraging to those who favor the full-blown export of domestic crude oil. But these interests shouldn’t get too excited, nor should they hold their breath waiting for change, analysts at ClearView Energy Partners LLC said in a note Tuesday.
"Today's action meets our expectation that the Obama Administration might use its administrative authority to incrementally loosen current prohibitions on crude oil exports," ClearView said. "Lawmakers may devote considerable energies to examining the BIS policy when Congress returns, but we reiterate low, near-term odds for legislation that lifts the crude oil export ban."