Industry needs to better defend oil exports − US energy secretary

05 March 2014 22:32 Source:ICIS News

HOUSTON (ICIS)--The oil industry needs to do a better job of explaining why the US should remove its current restrictions on oil exports, the US Secretary of Energy said on Wednesday.

Removing the restrictions on oil exports is the responsibility of the Department of Commerce, said Ernest Moniz, energy secretary, who made his comments during IHS CERAWeek.

Nonetheless, Moniz shared his thoughts on oil exports to the conference.

"I don't think the industry has done a good job of stating the case," he said. "I do think the industry can do a lot better job of explaining the drivers and implications of exports, certainly in a country that still imports."

The restrictions on exports were put in place more than 30 years ago in response to the oil crisis of the 1970s. Under the Export Administration Act of 1979, the US can only export crude oil to neighbours Canada and Mexico.

Some are now questioning the need for such restrictions because US oil production has risen sharply due to new techniques such as hydraulic fracturing (fracking) and horizontal drilling.

US oil production likely increased to an average of 7.5m bbl/day in 2013, up 1.0m bbl/day year over year, according to the Energy Information Administration (EIA). In 2012, US oil production was 6.5m bbl/day. During the recession in 2008, it was 5.0m bbl/day, close to a 60-year low.

Much of the new production is in light grades of crude. Many US refineries accommodate much heavier grades, especially along the Gulf Coast.

Rising light-crude production could exceed the nation's refining capacity, and the resurgence of US oil production would collide with the ban on exports.

During a media briefing, Moniz said that other factors regarding expanding US oil exports also remain cloudy.

For example, he asked what the balance should be between oil exports and imports as well as the ability of refiners to add or modify their capacity to handle lighter grades of crude.

"There are a lot of questions that have not been addressed in a clear way," Moniz said.

IHS CERAWeek lasts through Friday.

By Al Greenwood