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Murkowski Wants EIA to Analyze U.S. Crude, Condensate Export Ban

Alaska Republican Sen. Lisa Murkowski said Monday she plans to ask the U.S. Energy Information Administration for an economic analysis for lifting the U.S. crude oil export ban, and she also renewed a call to streamline regulations on condensate exports.

The ranking member of the Senate Energy and Natural Resources Committee was the opening keynote of IHS CERAWeek, a week-long event that brings together oil and natural gas executives from around the world. The event, which this year is expected to draw 2,300-plus, was launched in 1982 by Cambridge Energy Research Associates, now part of IHS Inc.

"Timing with legislation is everything, so we need to be doing the legwork with the Senate Energy Committee," Murkowski said. Exporting domestic crude oil, condensate and natural gas from unconventional U.S. plays could provide more global economic stability.

"We need to view our energy as an asset for global stability...The oil market is clearly a global market."

Murkowski on Monday issued a 51-page white paper to reassert her call for the Obama administration to fast-track domestic exports, arguing that small exceptions could be made first for the estimated 1 million b/d of condensate that flows with crude from oil wells. The paper, "Past is Precedent: Executive Power to Authorize Crude Oil Exports," follows her call in January asking for the administration to expedite export permits (see Daily GPI, Jan. 7). The paper was prepared by Murkowski's staff.

Oil export restrictions were imposed during the 1973 oil embargo and became law in 1975. However, exceptions since have allowed crude to be transported to Canada from Alaska and California (see Shale Daily, Jan. 23). Murkowski traced the history of six separate exceptions to the ban, first by President Reagan in 1981, when he removed limits on refined petroleum products. Presidents George H.W. Bush and President Clinton subsequently directed other exceptions.

In each of the cases, the administrations determined specific classes of exports to be justified by the national interest, Murkowski noted.

With natural gas, oil and condensate overflowing from the U.S. onshore, the market needs relief, she said. If the administration isn't open to allowing more exports, the senator plans to draft legislation.

By relieving the U.S. oil ban slowly, in a piecemeal fashion, domestic markets would be able to expand the market and as a result, lower prices. To start with, Murkowski suggested that the ban on condensate exports should be withdrawn. By inching forward first with condensate exports, the administration would be able to circumvent a legislative battle on Capitol Hill.

"Presidents from both political parties have found limited exports to be in the national interest on multiple occasions," Murkowski said. "The historical record is clear that the executive branch retains the authority to permit crude oil exports under certain conditions.

"In fact, this was done on several occasions by successive administrations. The president has always acted with or through the Department of Commerce; in the cases of the U.S.-Canada Free Trade Agreement and Alaskan North Slope exports, the executive branch has collaborated with Congress. Even statutes that generally prohibit the export of crude oil contain provisions that permit the president to authorize exports under certain conditions.

Murkowski previously had asked the Department of Commerce to use a provision in the crude export ban that had concluded light, sweet crude may not be reasonably marketed because many U.S. refineries process heavier crude.

U.S. refiners are planning to add at least 400,000 b/d of refining capacity to existing plants to 2018, according to an IHS report issued on Monday. An estimated 18 new refining projects are on the table for siting on the Gulf Coast, and in the Midwest and Rocky Mountains that could increase refining capacity by as much as 600,000 b/d.

IHS CERAWeek always has drawn considerable interest from the global crowd, but this week, it's taking on a particular emphasis because of the incursion into Ukraine by Russia. Russia is one of the largest oil and gas producers in the world, and the top energy exporter to Europe. The Russian energy minister, who had been scheduled to speak to delegates on Tuesday, canceled his appearance.

Richard Haas, president of the Council on Foreign Relations, also told delegates on Monday the United States could consider expanding exports if it imposed sanctions on Russia for its blatant push to grab power in Ukraine.

Europe imports about 3.5 b/d of oil from Russia, or about 75% of Russia's exports, Haas said. U.S. oil production is at around 8 million b/d, up about 1 million b/d from a year ago.

"I was in favor of opening the export spigot before this," Haas told delegates.

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