- 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.