Thu, Nov 06, 2014 - Page 15 News List

BHP to test US regulations on crude oil export

ULTRA-LIGHT OIL:The mining company said the US Commerce Department regulations do not define as raw crude oil the processed concentrate it is to export


Mining giant BHP Billiton said yesterday it plans to ship ultralight oil from the US without the US government’s explicit permission in a move that will test a four-decades-long ban on crude exports.

The Anglo-Australian miner said the processed condensate, an ultra-light oil, would be exported from its Eagle Ford operations in south Texas.

The decision came just months after the US allowed two Texas-based companies to export condensate amid growing pressure on the government to end its ban on unrefined exports introduced in the 1970s as an energy security measure.

BHP said the condensate it planned to export — which is only lightly processed — is not raw crude oil as defined by the US Department of Commerce’s Bureau of Industry and Security regulations.

“After taking the necessary time to thoroughly examine the issues involved, we concluded that processed condensate is eligible for export,” a BHP spokeswoman said in a statement. “BHP Billiton has worked through a robust due diligence, secured a dedicated supply chain and has taken steps to ensure the quality of our product for export.”

BHP did not provide further details about the size of the exports.

Shares in the miner closed 0.56 percent lower at A$33.82 in Australia.

The supply of ultra-light oil has grown on the back of the boom in fracking-based exploration and production of natural gas.

The production surge from shale-based deposits in areas like North Dakota and Texas has sharply reduced the need for imports and created regional surpluses due to distribution bottlenecks.

While the industry has pushed for exports to be allowed from areas like the Gulf of Mexico, opponents fear that competing with crude export markets could see fuel prices rise in the US.

Although the export of raw crude is banned, the US already exports large volumes of refined oil products.

BHP acquired Eagle Ford after its takeover of US firm Petrohawk Energy in 2011. BHP said last week it was selling some of its US shale gas holdings and continuing to focus on the more profitable shale liquid assets at Eagle Ford and Permian.

BHP forecasts liquids production of approximately 200 thousand barrels per day by the 2017 financial year from the two sites.

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