Following long ban, U.S. could dominate global light oil supply

Mon Jun 30, 2014 12:00am EDT
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By Edward McAllister

NEW YORK, June 30 (Reuters) - After decades of isolation, the United States is set to become a major player in the global trade of ultra light oil as recent government export approvals attract interest across the world.

Following rulings disclosed this week, U.S. companies can now export the light, gaseous petroleum known as condensate after a forty-year ban, giving them access to needy markets in Latin America and Asia and potentially threatening the dominance of other established producers in the Middle East and Africa.

Companies are ready to ship condensate from some of the United States' massive oil and gas fields within weeks. By the end of the year, as much as 300,000 barrels could be exported each day, according to analysts at Citi in New York, a timely event as Asian countries increase capacity to import and exporters elsewhere face headwinds.

"It could have an enormous impact," said Al Troner a condensate expert and president of Asia Pacific Energy Consulting. "It could happen within the next two weeks."

Up to one million barrels of condensate is produced each day in the United States, all of which can be exported after some basic refining to reduce volatility, known as stabilizing, according to the U.S. ruling. That is double the amount exported by Qatar, the world's leading condensate producer.

The amount exported and where it goes depends on the kind of condensate that is produced and whether it is the right grade to feed petrochemical plants in China or Japan or to dilute heavy crude produced in Latin America.

Enterprise Products Partners and Pioneer Natural Resources this week both said that they have received private go-ahead from the Commerce Department to export condensate. Enterprise said it is ready to start exporting anytime.

Exports of condensate, a major feedstock for the petrochemical industry, will provide the first outlet for the vast amounts of oil and gas now produced in the United States. It will also give an inkling of the impact that a U.S. drilling boom could finally have abroad if other types of crude are approved for export.   Continued...