Seeking Alpha

BP finds way to bypass U.S. crude export ban

  • BP (BP) has forged a deal to buy at least 80% of the capacity of a $360M, 100,000 barrel-a-day mini-refinery that Kinder Morgan Energy Partners (KMP) plans to open in July.
  • The facility will refine the oil just enough that BP will be able to export it out the U.S., which forbids the sale of crude overseas.
  • "It's a relatively inexpensive way around the export prohibition," says energy economist Judith Dwarkin. "You can lightly ruffle the hydrocarbons and they are considered processed and then they aren’t subject to the ban."
  • Valero Energy (VLO) and Phillips 66 (PSX) are looking at building similar plants, which cost one tenth the price of a full-scale refinery to build.
  • Should the idea catch on, it could render the argument about lifting the crude export ban somewhat moot. The issue has received renewed prominence amid the crisis in Ukraine and the leverage Russia has because of its energy sales.
Comments (15)
  • borrowed time
    , contributor
    Comments (25) | Send Message
     
    I am a new KMP investor. This is just another bit of good news slipping out. There have been a number of them in the last three months or so, of major changes and cost saving projects. For the last year or so it has been evident that US and world energy is changing and I think KMP and KMI etc have been preparing for it, and hopefully will be one or two jumps ahead of the pack. You have to sow to reap, so perhaps that's what the detractors have picked up on.

     

    Bob
    6 Mar, 06:10 AM Reply Like
  • User 353732
    , contributor
    Comments (4785) | Send Message
     
    Innovative companies often route around the damage caused by Bad Government.
    The very light(and valuable ) fractions are stripped and the heavier product can then be shipped abroad for further refining.
    This is a value transfer from producers to market intermediaries solely as a result of perversion of free trade.
    6 Mar, 07:13 AM Reply Like
  • rjj1960
    , contributor
    Comments (1359) | Send Message
     
    Good for BP, they have been horsewhipped into an absurd settlement.
    6 Mar, 07:20 AM Reply Like
  • SimonSaysShort
    , contributor
    Comments (105) | Send Message
     
    You really have to give BP a lot of credit, they are constantly doing something to give the masses a reason to hate them even more. Really brilliant stuff.
    6 Mar, 07:39 AM Reply Like
  • Landsharks6
    , contributor
    Comments (97) | Send Message
     
    I think they have steeped up to the plate in good intent by everything they have done to remedy the oil spill debacle, truth be known Macondo was a floating platform rig if the coast guard hadn't dumped tons of water to put out the fire the well head would never have broke. No one looks at these things.

     

    B.P. great company with shareholder interest at forefront
    6 Mar, 10:47 AM Reply Like
  • smurf
    , contributor
    Comments (3777) | Send Message
     
    Plus their gas is higher than anybody else. If you do see a bargain price at a BP, the little tiny print below will say either "cash" or "with car wash". Gotta watch those Britties!
    6 Mar, 04:51 PM Reply Like
  • PeteCal
    , contributor
    Comments (90) | Send Message
     
    Proof again that the average businessperson can outsmart the smartest legislator every time. Why do they even try?
    6 Mar, 09:45 AM Reply Like
  • TheRonbo
    , contributor
    Comments (9) | Send Message
     
    BP should have been bought back when the stock price was $32.... Lest I was hoping. They've proven again & again just how incompetent they are. Some day, they'll figure out that killing people is expensive.

     

    I've worked in the oil patch my whole career. You can tell which companies really care about safety, and those that give it lip service.

     

    As an investor I stay away from dishonest companies that continual shoot themselves in the foot. BP, Prudential are on my list. Thinking of adding JP Morgan to that as well.

     

    I am a capitalist ... the anti-export law is a bad one.

     

    Until I hear through the grape vine that BP really is taking safety seriously, I won't be investing in BP.

     

    Don't misunderstand me - I'm not worried about safety just because killing people through negligence is wrong. Its shows they don't know how to run a company. Look at all the spills on the Alaska pipeline - all the refineries they've blown up - as well as turning the gulf into one big oil slick. Frankly, I don't think BP was punished enough for that. The CEO should have been held up on manslaughter chargers. Then another major oil co. should have bought the thing and thrown out the rest of upper managment.
    6 Mar, 09:57 AM Reply Like
  • BlueOkie
    , contributor
    Comments (4455) | Send Message
     
    Ronbo,

     

    Well said. Management is a major factor in who I invest in. Safety is costly not only to people but the bottom line. When I see a practice I don't like I jump ship. There are plenty of places to invest where safety is important. I watched the gov't oversight of BP. Our gov't hasn't got a clue.
    6 Mar, 10:12 AM Reply Like
  • Choosh
    , contributor
    Comments (325) | Send Message
     
    Stupid government meets clever business, public pays twice.
    6 Mar, 12:05 PM Reply Like
  • NV_GARY
    , contributor
    Comments (1743) | Send Message
     
    I don't think spending money on partial refining causes the legislation to be moot-- if exporting crude is allowed, then what happens to these refiners- money spent poorly for short-term run around tactic? If we are floating in excess oil, won't it get approval anyway?
    6 Mar, 12:45 PM Reply Like
  • Blue22
    , contributor
    Comments (126) | Send Message
     
    The no-brainer move for the US is to get all the NGL, propane, crude sweet and sour crude, flared gas, etc. asap to Europe and East Europe. The North Sea is maxed out and far too expensive. In some ways lack of supply makes Brent an unnecessary liability. Instead our neurotic, paranoid government with their greenies blow billions trying to fight invisible crude monsters and the evil corporations. GET OUT OF THE WAY!

     

    Replacing much of the filthy, Russian natural gas with US propane would be a life saver for Ukraine and the other countries under Putin's energy boot. Most of our surplus petroleum products and byproducts from ethanol to jet fuel could jump-start a new economy and help far more than paper cash! NGL's are the future and are ready to go.

     

    Partial Refining is a brilliant idea being put into immediate action by Richard Kinder. With Valero and others on board we can help feed the energy-starving East Europeans and knock Russian filthy oil off the market, where it should be
    7 Mar, 02:03 AM Reply Like
  • BlueOkie
    , contributor
    Comments (4455) | Send Message
     
    Exporting energy to EU will help the Ukraine issue and lower Russia's leverage
    7 Mar, 11:18 AM Reply Like
  • Digusted
    , contributor
    Comment (1) | Send Message
     
    Ignorant hypocrite. There are 10x more workers killed in the US doing onshore drilling every year than were killed in the Macondo incident. Nobody gives a crap about them, all anyone talks about what a great "success" the shale oil/gas trend is ... LOL
    7 Mar, 05:24 PM Reply Like
  • lonestar40
    , contributor
    Comments (36) | Send Message
     
    This plan should send a message to all the government control freaks who believe they can impose their feel good policies on the marketplace without repercussion. Congrats to Kinder for moving fast for a large company.
    BTW---has anyone noticed that the Eagle Ford basin is as large south of the Rio Grande as it is in Texas? When the new president of Mexico gets his government out of the way, pipe will be flying everywhere down there!
    10 Mar, 05:34 PM Reply Like
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