UPDATE 2-MEG Energy considering Canadian crude re-exports from U.S

Wed Oct 29, 2014 11:53am EDT
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(Adds details on re-exports, quote, updates share price)

By Nia Williams

Oct 29 (Reuters) - Canadian oil sands producer MEG Energy is considering applying for a license to re-export Canadian crude from the U.S. Gulf Coast, chief executive officer Bill McCaffrey said on Wednesday.

MEG has committed capacity of up to 100,000 barrels-per-day on Enbridge's new Flanagan South pipeline, which will link up with the Seaway pipeline to transport crude to the Gulf Coast.

From there it could be shipped by tanker to overseas markets. Re-exporting, which requires a license from the U.S. Department of Commerce, is an enticing prospect for oil sands producers in landlocked Alberta as it enables them access to higher international prices for their crude.

Enbridge Inc subsidiary Tidal Energy Marketing and Russian oil major Lukoil have both shipped cargos to Europe this year.

"We are certainly looking at this type of thing. If you take the Flanagan South and Seaway combination it lands us in Houston and obviously we can move crude out of this area," McCaffrey said on the company's third-quarter earnings call.

"We did evaluate that as one possible area to move crudes offshore. We have not applied at this stage but we are evaluating things."

The United States does not allow exports of its own oil, with few exceptions such as barrels going to Canada or re-exports of foreign oil from U.S. ports.   Continued...