BP to export U.S. crude to Canada, Shell seeks permit

Thu Oct 11, 2012 8:01pm EDT
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By David Sheppard and Chris Baltimore

NEW YORK/HOUSTON (Reuters) - Oil major BP Plc has secured U.S. government permission to ship U.S. crude oil to Canada, and Royal Dutch Shell has applied for an export license, as rising production in the world's top oil consumer upends global energy flows.

A surge in output from shale oil reserves in the Bakken of North Dakota and Eagle Ford of Texas has raised U.S. domestic production to the highest level since 1995.

While the United States still imports more than 8 million barrels of crude oil per day, a glut of light, sweet crude oil created by the controversial hydraulic fracturing or 'fracking' boom could fetch higher prices on international markets.

This summer BP Plc received a license to export crude oil to specific Canadian refineries from the Bureau of Industry and Security, a branch of the US Commerce Department, a source familiar with the issue said on Thursday. BP has yet to export any crude oil on that license, the source said.

Shell spokeswoman Kayla Macke told Reuters they have also now applied for a license, but would not comment on likely export destinations or the volumes of crude involved.

"We have applied to the Department of Commerce to export domestic U.S. crude oil," Macke said, adding that as a global commodity, imports and exports would follow supply and demand.

A nearly century-old U.S. law requires companies to get a special license to export crude oil. Until recently, there has been little or no demand for overseas shipments, apart from a trickle of crude from Alaska that has been routinely exported.

So far, the export business appears geared toward sending supplies of light, sweet Bakken crude from North Dakota to a clutch of Canadian refiners on the East Coast, which are otherwise dependent on costlier European imports.   Continued...

A British Petroleum (BP) logo is seen at a petrol station near the Burj Khalifa in Dubai August 29, 2012. REUTERS/Jumana ElHeloueh