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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Lifting the U.S. ban on crude-oil exports would lower retail gasoline prices, among other benefits, Scott Sheffield, chairman and chief executive officer (CEO) at Pioneer Natural Resources Company (NYSE:PXD) (Irving, Texas), told attendees at an Oil & Gas conference here Wednesday. And failure to lift that ban could overwhelm the nation's Petroleum Refining industry and lead to a collapse of crude-oil prices, he added.
Sheffield's call was echoed by other speakers at the 26th Annual Rocky Mountain Energy Summit, sponsored by the Colorado Oil & Gas Association (COGA) (Denver, Colorado). Colorado Governor John Hickenlooper and Utah Governor Gary Herbert agreed with Sheffield.
"Being able to export crude oil and liquefied natural gas (LNG) would make the U.S. secure," Hickenlooper said on Aug. 6. Added the Utah governor: "I oppose restrictions on energy exports. They are short-sighted at best. I'm a free-market guy."
Congress banned crude-oil exports four decades ago after the U.S. economy was rocked by the oil embargo from the Organization of the Petroleum Exporting Countries (OPEC). At the time, domestic crude oil was thought to be a dwindling resource, and the ban sought to conserve that strategically vital resource. Since then, horizontal drilling and hydraulic fracturing have combined to dramatically increase U.S. crude oil production.
Sheffield's company recently received government approval to export lightly processed Eagle Ford condensate to an Asian country. Prior to being loaded onto a tanker, the condensate was run through a distillation unit that removed some of its liquefied petroleum gas (LPG). The U.S. Commerce Department said the minimally processed condensate was a refined product, which can be freely exported.
"We need the crude-oil ban lifted," the Pioneer CEO told an estimated 1,800 attendees at the COGA event. "Exporting crude oil and liquefied natural gas (LNG) will add another 1.3 million jobs, while lowering our trade deficit." Several LNG export terminals have received U.S. export permits, and the first export shipment of LNG is expected in about a year's time.
"A crude-oil price collapse is the only thing that can stop the shale revolution," Sheffield continued. He suggested such a collapse was not unthinkable. West Texas Intermediate (WTI) crude oil sells at a discount to Brent, because domestic refiners can't process all the light, sweet crude oil being produced from Eagle Ford Shale, Permian Basin and Bakken Shale. Condensate sells at a hefty discount to WTI because domestic refiners have very little ability to process it. Without the ability to export crude oil, domestic stockpiles of crude will continue rising, eventually leading to a collapse in prices.
But the removal of the crude-oil export ban would stimulate even greater domestic production of crude oil, which should lower global oil prices. Those declining feedstock costs eventually would lower the retail price of refined products, Sheffield said. In an convention-floor interview with Industrial Info, the Pioneer CEO said removing the crude-oil export ban would push domestic crude-oil production to 14 million barrels per day (BBL/d) by 2024, roughly 3 million barrels per day higher than the forecast by the U.S. Energy Information Administration (EIA) (Washington, D.C.), the statistical and analytic branch of the U.S. Department of Energy (DoE) (Washington, D.C.). The U.S. currently produces about 8.5 million barrels of oil per day.
In his remarks to the COGA conference, Sheffield said Congress and the Obama administration tended to view energy issues through the prism of lowering prices at the pump for gasoline and diesel. He said removing the export ban would do that while creating jobs, increasing energy security, boosting tax collections and lowering the trade deficit. He said a study by consultants IHS Incorporated (NYSE:IHS) (Englewood, Colorado) supported his view.
For all those reasons, Sheffield predicted the crude-oil ban would be relaxed or repealed by 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Sheffield's call was echoed by other speakers at the 26th Annual Rocky Mountain Energy Summit, sponsored by the Colorado Oil & Gas Association (COGA) (Denver, Colorado). Colorado Governor John Hickenlooper and Utah Governor Gary Herbert agreed with Sheffield.
"Being able to export crude oil and liquefied natural gas (LNG) would make the U.S. secure," Hickenlooper said on Aug. 6. Added the Utah governor: "I oppose restrictions on energy exports. They are short-sighted at best. I'm a free-market guy."
Congress banned crude-oil exports four decades ago after the U.S. economy was rocked by the oil embargo from the Organization of the Petroleum Exporting Countries (OPEC). At the time, domestic crude oil was thought to be a dwindling resource, and the ban sought to conserve that strategically vital resource. Since then, horizontal drilling and hydraulic fracturing have combined to dramatically increase U.S. crude oil production.
Sheffield's company recently received government approval to export lightly processed Eagle Ford condensate to an Asian country. Prior to being loaded onto a tanker, the condensate was run through a distillation unit that removed some of its liquefied petroleum gas (LPG). The U.S. Commerce Department said the minimally processed condensate was a refined product, which can be freely exported.
"We need the crude-oil ban lifted," the Pioneer CEO told an estimated 1,800 attendees at the COGA event. "Exporting crude oil and liquefied natural gas (LNG) will add another 1.3 million jobs, while lowering our trade deficit." Several LNG export terminals have received U.S. export permits, and the first export shipment of LNG is expected in about a year's time.
"A crude-oil price collapse is the only thing that can stop the shale revolution," Sheffield continued. He suggested such a collapse was not unthinkable. West Texas Intermediate (WTI) crude oil sells at a discount to Brent, because domestic refiners can't process all the light, sweet crude oil being produced from Eagle Ford Shale, Permian Basin and Bakken Shale. Condensate sells at a hefty discount to WTI because domestic refiners have very little ability to process it. Without the ability to export crude oil, domestic stockpiles of crude will continue rising, eventually leading to a collapse in prices.
But the removal of the crude-oil export ban would stimulate even greater domestic production of crude oil, which should lower global oil prices. Those declining feedstock costs eventually would lower the retail price of refined products, Sheffield said. In an convention-floor interview with Industrial Info, the Pioneer CEO said removing the crude-oil export ban would push domestic crude-oil production to 14 million barrels per day (BBL/d) by 2024, roughly 3 million barrels per day higher than the forecast by the U.S. Energy Information Administration (EIA) (Washington, D.C.), the statistical and analytic branch of the U.S. Department of Energy (DoE) (Washington, D.C.). The U.S. currently produces about 8.5 million barrels of oil per day.
In his remarks to the COGA conference, Sheffield said Congress and the Obama administration tended to view energy issues through the prism of lowering prices at the pump for gasoline and diesel. He said removing the export ban would do that while creating jobs, increasing energy security, boosting tax collections and lowering the trade deficit. He said a study by consultants IHS Incorporated (NYSE:IHS) (Englewood, Colorado) supported his view.
For all those reasons, Sheffield predicted the crude-oil ban would be relaxed or repealed by 2017.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
