25 June 2019
A domestic drilling boom has turned the US into an energy powerhouse. Photo: Bloomberg
A domestic drilling boom has turned the US into an energy powerhouse. Photo: Bloomberg

US opens gate for shale oil exports

The United States has taken steps to unleash shale oil onto global markets by lifting a 40-year-old ban on exports of most domestic crude.

After months of growing pressure, the Bureau of Industry and Security (BIS), which regulates export controls, said it granted permission to some companies to export lightly treated condensate, a form of ultra-light crude, Reuters reported Wednesday.

About two dozen energy companies had asked the agency for clarification on permissible exports earlier this year.

Until Tuesday those requests had been put on indefinite hold.

The BIS also released a fact sheet to explain what kind of oil is generally allowed, the first effort by the administration to clarify an issue that has caused confusion and consternation in energy markets for more than a year.

The two measures are the clearest signs yet that the administration is ready to allow more of the booming US shale oil production to be sold overseas, where drillers have said it can fetch a premium of US$10 a barrel or more.

A domestic drilling boom in the past six years has transformed the US into an energy powerhouse, boosting US production by more than 50 percent and reversing decades of decline.

Output of very light oil has been especially strong, leading to a glut that threatens to overwhelm domestic demand.

The constraints helped fuel bumper profits for refiners such as Valero Energy Corp and PBF Energy Inc. but angered drillers such as Hess Corp that say they were selling at a discount.

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