Experts on Lifting of the Crude Export Ban: We're All Winners
Energy executives representing all sectors of the oil and gas sector believe opportunities lie in the recent lifting of the crude export ban. During a panel session at the KPMG Global Energy Conference Wednesday, C-suite executives in upstream, midstream and downstream all ultimately agreed that Congress’ decision to lift the ban on crude exports was a good thing. No real surprises there.
Tony Chovanec, vice president, fundamentals and supply appraisal for Enterprise Products, said lifting the ban will bring efficiency to the transport of hydrocarbons.
“We have a significant overhang of oil around the world … as we work through that overhang, I think you’re going to be surprised at the number of people that are investing in the US who want some of the US hydrocarbons in their portfolio,” he said.
Chovanec, whose company exports between four and six million barrels of oil per day, said he’s seeing companies finding niche opportunities in regards to tight oil – essentially, they’re acquiring the oil where it makes sense to have it in their portfolio.
“What we now have is an improvement in efficiency of how we allocate [oil],” said Dr. Harold “Skip” York, vice president, integrated energy for Wood Mackenzie. “A lot of US crude oil exports’ final destination is the US.”
York explained this is because Venezuela is the largest destination of the US light crude exports and the country uses the US crude as a diluent for Venezuela’s heavy crude oil that comes back to the US refineries.
“That’s an example of the efficiency because when a Venezuelan polluted heavy oil tanker comes in, it discharges a heavy crude which the US refineries need and the tanker reloads with a light crude and heads back to Venezuela,” he said.
That wouldn’t have been the case if the ban were in place, he said.
In addition, doing away with the ban stabilizes crude oil prices around the globe, said James (Tim) Rens, executive vice president and chief financial officer for Philadelphia Energy Solutions, LLC.
As for the big winners in this … it depends on who you ask.
“I think there are relative winners and the first relative winner is location,” said York. “The closer you are to water, the more you’re going to benefit from lifting the export ban. So Texas has an advantage over Oklahoma which has an advantage over North Dakota which has an advantage over Alberta. The other source of winners are those who can aggregate volume and stabilize quality.”
Chovanec stated the upstream sector is an obvious winner as well as the consumer because of the efficiency and lower oil prices.
“And midstream wins because we stand to provide services for both,” he said.
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