Getting Around the U.S. Crude Export Ban

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Oil

Those who seek to get around the ban on most of the U.S. crude exports that have been in place for four decades are reportedly eyeing the potential to export petroleum byproducts, or condensates, instead.

According to the Wall Street Journal, some 1 million barrels of the 8 million barrels of oil produced in the U.S. every day are condensates, and while the rules ban exports of condensates that come directly out of the ground in liquid form, they don’t necessarily ban condensates that are stripped from natural gas at processing plants.

Today, we are seeing significantly more of these particular condensates flowing because of the boom in shale extraction from major plays like Bakken, Eagle Ford, and Utica, among others. The rational is that because this condensate plays only a very minor role in producing gasoline or diesel fuel, its export would not have much impact on consumer prices  – as some fear lifting the crude export ban would.

Sandy Fielden, an analyst with RBN Energy consulting, told the Journal that there is now more condensate than chemical plants and refineries can process, so there’s no reason it couldn’t be exported. According to Reuters, this is a “gray area,” but one that is “thought to stand a good chance of getting export approval.”

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