Phillips 66 says lifting U.S. crude export ban good for refiners, U.S. trade


Lifting the U.S. ban on crude exports would give refiners more flexibility to run a variety of grades and help narrow the U.S. trade deficit, a Phillips 66 (PSX -0.2%) official said yesterday as did former Sec. of State James Baker.

The comments come as production of U.S. crude has surged to a 25-year high and refiners say their capacity to process more light, sweet crude from onshore fields will eventually hit a wall.

Scrapping the ban would affect refiners differently: PSX has 21% of its refinery capacity outside the U.S. and has put a plant in Ireland up for sale, while Valero (VLO -0.5%) has nearly all its working capacity in North America.

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Comments (8)
  • Captain Pike
    , contributor
    Comments (890) | Send Message
     
    Build more refineries in the US and export finished product.
    23 Jan 2014, 11:31 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2860) | Send Message
     
    I had no luck on Twitter, so is there anyone on SA who knows if there is even any infrastructure to export crude in the US, or how long it would take to reverse the import terminals? Or would new terminals need to be built? Are we talking weeks, months, years?
    23 Jan 2014, 11:34 AM Reply Like
  • Michael Fitzsimmons
    , contributor
    Comments (10970) | Send Message
     
    Hi Mike - from what I can tell, there isn't an infrastructure issue to exporting crude. The storage tanks are already there due to decades of importing. Likewise, much of the pipeline infrastructure in the Gulf Coast region is there and has been reversed already. Tanker access on ports is already there. So it may boil down to just reversing pumps. Currently, the only impediment to exporting crude on Jones Act ships is the availability of the ships, not the infrastructure to load them.
    23 Jan 2014, 01:35 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2860) | Send Message
     
    So to reverse the pumps and maybe make some small upgrades, we're talking ~ 6 months, right? As for the Jones Act, that's another law that should likely be re-examined. KEX is a huge beneficiary of that law.
    23 Jan 2014, 02:01 PM Reply Like
  • lss1734
    , contributor
    Comments (9) | Send Message
     
    The Jones Act forces commerce via ship within the U.S. to be carried on American-flagged vessels. It has no bearing on commerce transported to foreign countries.
    24 Jan 2014, 01:49 AM Reply Like
  • Michael Fitzsimmons
    , contributor
    Comments (10970) | Send Message
     
    Mike - 6 months seems a bit lengthy...heck, I'd think 6 weeks...there's a good chance some of this work is already done considering Eagle Ford crude is already being shipped to Canadian refineries:

     

    http://seekingalpha.co...
    24 Jan 2014, 08:28 AM Reply Like
  • kmi
    , contributor
    Comments (4562) | Send Message
     
    Refiners right now benefit from low cost of domestic crude and laws barring export of crude. They sit in the middle of that, buying cheap crude and exporting refined products - no law against that - to pricier markets.

     

    I guess having 21% capacity overseas means they think losing some margin on domestic crude can be made up in volume if allowed to export to their other refineries? Not sure other refiners will be on board with this, but my 2cents says with such a small amount of beneficiaries perhaps the crude export ban no longer makes sense. Especially considering low domestic crude prices aren't having much of an impact on refined products prices.
    23 Jan 2014, 12:03 PM Reply Like
  • Michael Fitzsimmons
    , contributor
    Comments (10970) | Send Message
     
    kmi - interesting point about PSX having 21% of their capacity overseas and the benefit to that capacity if the ban is lifted. I missed that angle on my article about why PSX would support crude oil exports:

     

    http://seekingalpha.co...

     

    Certainly crude exports might make it easier to sell the refinery in Ireland.
    23 Jan 2014, 01:39 PM Reply Like
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