Seeking Alpha

U.S. clears way for some oil exports by Pioneer Natural, Enterprise Products

  • Pioneer Natural Resources (PXD) +4.2% AH and Enterprise Products Partners (EPD+1% after WSJ reports the U.S. government has taken steps to allow the two companies to export condensate that could be turned into jet fuel or diesel.
  • Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself; the government's new approach reportedly redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad.
  • The first shipments - which could begin as soon as August - likely will be small but ultimately could include much of the 3M bbl/day of oil energy companies are pumping from shale, industry experts say, depending on how regulators define what qualifies for export.
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Comments (51)
  • frosty
    , contributor
    Comments (696) | Send Message
     
    6 years ago, republicans were screaming that Obama was an anti-oil president, opposed to increased drilling and production. Now we're exporting the stuff as his administration has led the way in producing ever more shale oil. Oh wait, won't they now be opposed to further production and especially exporting oil because he is for it?
    24 Jun, 06:27 PM Reply Like
  • manfredr
    , contributor
    Comments (5) | Send Message
     
    Obama has nothing to do with it! Why does he delay the Keystone. offshore drilling, as well as no drilling on Federal Land! Obama is against all oil production, but it continues despite him.

     

    Frosty you need to get your facts straight!
    24 Jun, 07:10 PM Reply Like
  • jimstravels
    , contributor
    Comments (70) | Send Message
     
    Frosty,

     

    Maybe you could give us one or two examples of how the 'administration has led the way in producing ever more shale oil".
    24 Jun, 10:21 PM Reply Like
  • aeroguy48
    , contributor
    Comments (654) | Send Message
     
    Shale oil growth has been entirely been done on private/state property away from obamas grubby hands.
    25 Jun, 10:22 AM Reply Like
  • chammond63
    , contributor
    Comments (68) | Send Message
     
    Not many Obama fans on this site..must be why I'm on here all the time!
    25 Jun, 10:28 AM Reply Like
  • maudie
    , contributor
    Comments (473) | Send Message
     
    Ignorance is never intentional.
    25 Jun, 10:29 AM Reply Like
  • Wreckdiver
    , contributor
    Comments (30) | Send Message
     
    Frosty
    You are incredibly ignorant. Obama has done nothing and blocked every effort in energy except his theft of government money for Solyndra and others in solar and wind which not economically feasible. Go back to your food stamps.
    25 Jun, 11:00 AM Reply Like
  • Alex T
    , contributor
    Comments (271) | Send Message
     
    See what is happening in New York state Devil Dog? State government is putting all kinds of restrictions on Shale drilling and production. A very Blue state.
    25 Jun, 11:40 AM Reply Like
  • Alex T
    , contributor
    Comments (271) | Send Message
     
    Amen. Seeing it here in South Texas.
    25 Jun, 11:40 AM Reply Like
  • Hendershott
    , contributor
    Comments (1558) | Send Message
     
    Some wouldn't be happy if hung by a new rope.
    25 Jun, 03:08 PM Reply Like
  • tleist
    , contributor
    Comment (1) | Send Message
     
    All the drilling is on PRIVATE lands, nothing to do with the government or our so called president, odumbo. He won't open up government lands and apposes the Keystone pipeline, he's anti energy, anti American, but what would you expect from someone not of American heritage.
    25 Jun, 03:26 PM Reply Like
  • Hendershott
    , contributor
    Comments (1558) | Send Message
     
    The sound of crickets chirping.
    24 Jun, 06:39 PM Reply Like
  • NUNAY the KING
    , contributor
    Comments (236) | Send Message
     
    This is obviously in support of Western Europe, which is in a potential bind due to Russia cutting off supplies of natural gas. It's hard to have sanctions if Western Europe is over dependent on Russian gas. How convenient that it also helps US oil companies who are positioned correctly..hopefully, someone will enlighten me on oil companies which stand to benefit the most from this gradual policy change.
    24 Jun, 06:43 PM Reply Like
  • markrpat
    , contributor
    Comments (206) | Send Message
     
    Nun...here's the problem. Your assumption is that it is a gradual policy. Maybe...but I suspect that the world isn't that organized. So, there is the possibility of news manipulation and "quid pro quo" between central banks causal to bumpy ride.. especially during mid-term elections in USA.

     

    Hmm...same amount of comments you and I. Hope I can sleep. Slightly rattled :)
    24 Jun, 10:41 PM Reply Like
  • aeroguy48
    , contributor
    Comments (654) | Send Message
     
    Me likes my oil company investments, they been good to me.
    25 Jun, 10:24 AM Reply Like
  • maudie
    , contributor
    Comments (473) | Send Message
     
    Well it not our refiners.
    25 Jun, 10:30 AM Reply Like
  • Alex T
    , contributor
    Comments (271) | Send Message
     
    Me too.
    25 Jun, 11:42 AM Reply Like
  • Hendershott
    , contributor
    Comments (1558) | Send Message
     
    ETE, ETP, Targa....transport liquids to the gulf and have terminals....everyone who produces liquids in the Marcellus, Utica and Eagle Ford....EOG, RRC, PXD, ECA, COP, DVN. PVA...pretty much everyone.....
    24 Jun, 06:59 PM Reply Like
  • jrs03n
    , contributor
    Comments (68) | Send Message
     
    Opinion's on how this will effect refiners? Is the potential for this to narrow WTI-Brent real / a concern?
    24 Jun, 07:29 PM Reply Like
  • okmnx
    , contributor
    Comments (13) | Send Message
     
    This has nothing to do with Nat Gas, yet. Anyone who thinks that this is good for USA is mistaken. This will lead to higher prices for oil in USA. I'm sure some will disagree but I strongly feel that our oil and Natgas should stay in this country. This new development opens the door to higher prices at home. IMHO it is a mistake. I'm willing to hear from the more astute contributors as to why shipping our oil oversees is good for America.
    24 Jun, 07:33 PM Reply Like
  • Pablomike
    , contributor
    Comments (1625) | Send Message
     
    It's about condensates of which we have a glut. The prices for Naptha, Butane, Propane, and Kerosene have plummeted and can be sold on the foreign market for much more than in the US.
    24 Jun, 08:28 PM Reply Like
  • cannedpawn8
    , contributor
    Comments (196) | Send Message
     
    I'd like to hear also.
    25 Jun, 07:01 AM Reply Like
  • Alex T
    , contributor
    Comments (271) | Send Message
     
    Okmnx: Either way, right now the Senate is proposing a 12 cent increase in gasoline. How is that going to effect truckers. Believe me, they calculate cost increases often especially if you fill up your truck with a few hundred gallons.
    25 Jun, 11:46 AM Reply Like
  • Topcat
    , contributor
    Comments (426) | Send Message
     
    I'm concerned about that as well, but the way to handle it is to capture some of those profits via taxes. But I agree, we don't want to be on the open market as far as protecting our own economy so some extent.
    25 Jun, 01:00 PM Reply Like
  • Econ Student
    , contributor
    Comments (211) | Send Message
     
    This will bring down the price of Brent Crude. It will increase the price of WTI which is what we use here in the U.S. Get ready for higher gas prices here in the states.
    24 Jun, 07:36 PM Reply Like
  • okoil
    , contributor
    Comments (104) | Send Message
     
    IF you are an econ student you should know that this would actually decrease prices at the pump due to compression of refiners margins.

     

    Refiners currently buy at WTI prices and sell at Brent prices (because they can export products, which they do a lot of). So if this decreases the price of Brent, then it will also decrease the price at the pump slightly.
    24 Jun, 10:30 PM Reply Like
  • Econ Student
    , contributor
    Comments (211) | Send Message
     
    Not going to happen. Demand has went down for years. Gas prices are the same or higher.
    25 Jun, 02:39 AM Reply Like
  • okoil
    , contributor
    Comments (104) | Send Message
     
    How do you figure demand has decreased?

     

    http://1.usa.gov/Xg8Id0

     

    Crude and its products are part of a global market. If the US demands less gasoline, but China demands more, it would make sense for US refiners to refine the same amount of crude and export the products. So the price wouldn't decrease. The only product not tradable is raw crude exports, which occasionally depresses WTI vs Brent, which only pads the refiners profits.
    25 Jun, 04:49 AM Reply Like
  • yalcocer
    , contributor
    Comments (12) | Send Message
     
    I think isn't that simple. I recommend to take a look to Valero's "Investor Presentation", Nov 2013 (slide 14).

     

    http://bit.ly/1rxDcUT

     

    It won't be good for refiners as they are losing a competitive advantage of exclusive access to US crude. "U.S. refiners such as Valero Energy Corp (NYSE: VLO) and Marathon Petroleum Corporation (NYSE: MPC) currently benefit enormously from cheap WTI. Valero Energy and Marathon Petroleum buy WTI as input, but price their products based on more expensive brent. The cheaper WTI becomes in relation to brent, the more profits the refiners make".

     

    http://bit.ly/1rxDcUX
    25 Jun, 07:01 AM Reply Like
  • okoil
    , contributor
    Comments (104) | Send Message
     
    Yal,

     

    All of that is correct! But unless you are an owner of VLO, compression of refiners margin would benefit you. Prices at the pump will decrease slightly (a few cents across the nation adds up!) and it will give the domestic oil and gas industry more incentive to invest.

     

    I think in classic economic terms VLOs current profits would be considered "economic", meaning they shouldn't last in a functioning, competitive market.
    25 Jun, 11:58 AM Reply Like
  • Alex T
    , contributor
    Comments (271) | Send Message
     
    okoil. Do you realize that investments in the oil fields is already taking place. There is more being invested in my part of the State than what is expected to come out. Here at Ford's Eagle Shale the drilling is for oil not NG and something like 27 Billion dollars for 2014 will be invested for increased production.
    25 Jun, 12:13 PM Reply Like
  • Gtoz
    , contributor
    Comments (181) | Send Message
     
    Alex, okoil saying there will be more incentive doesn't mean there hasn't already been, or there isn't currently, much incentive.
    25 Jun, 02:10 PM Reply Like
  • Gtoz
    , contributor
    Comments (181) | Send Message
     
    okoil, well said. Having crude export trade barriers only holds back our industry's expansion, our economics of comparative advantage, OPECs further diminution of its cartel power, and probably global oil price reductions. Same could be said about NG, NGLs etc.
    25 Jun, 02:17 PM Reply Like
  • Econ Student
    , contributor
    Comments (211) | Send Message
     
    However much more the US produces OPEC will just produce less. Prices will not go down. You think oil companies are going to pass cost decreases down to consumers? lol
    25 Jun, 03:02 PM Reply Like
  • Alex T
    , contributor
    Comments (271) | Send Message
     
    Yes it is called competition. All that oil coming out from shale is being done by small and medium size companies. Remember too, it is the trading in oil futures that determines future prices. In my home city I see Walmart prices sometimes as much as 10 cents a gallon less than Valero.
    25 Jun, 04:15 PM Reply Like
  • okoil
    , contributor
    Comments (104) | Send Message
     
    Econ,

     

    OPEC isn't all powerful, those countries have a lot of bills to pay. Like you learn about cartels are hard to maintain, they all have a lot of incentives to cheat and even at this price level could end up destroying demand. Think 1986. Booms can't last forever.
    25 Jun, 07:07 PM Reply Like
  • yalcocer
    , contributor
    Comments (12) | Send Message
     
    Thanks you all for the discussion. It is quite interesting.

     

    I agree that having barriers create inefficiencies in the market. Overall US economy should be better off exporting crude.

     

    But this doesn’t mean that final gasoline price will be lower. Right now the input cost (crude) is lower and exporting domestic crude will increase this cost as it will match international prices. To be sure about the final price we need to look to the supply demand balance, input cost, product sales, and operational cost. It is hard to be sure if final gasoline price will be lower or higher.
    26 Jun, 07:07 AM Reply Like
  • Pablomike
    , contributor
    Comments (1625) | Send Message
     
    Isn't this what they are already doing at the splitter refineries in the Gulf area?? Minimally process condensate and export like a refined product. KMP is opening a 100,000 Barrel per day splitter next month.
    24 Jun, 07:39 PM Reply Like
  • Hillbilly Stock Star
    , contributor
    Comments (737) | Send Message
     
    Not sure how to figure.
    24 Jun, 07:53 PM Reply Like
  • markrpat
    , contributor
    Comments (206) | Send Message
     
    me either HSS. Might have to wait for more news related manipulation. GL.
    24 Jun, 08:12 PM Reply Like
  • rrrus
    , contributor
    Comments (12) | Send Message
     
    Classic example of be careful what you wish for. For years we have been hearing how wonderful it would be if we became energy independent with more reasonable gas prices and minimal reliance on the middle eastern producers who really don't like us very much. Now that we are approaching that goal, we find oil and gasoline prices at near record highs with no sign of relief and on the verge of going back to war for the benefit of the many of the major international oil companies and other countries who should be shouldering this responsibility themselves if they want the oil.
    24 Jun, 08:21 PM Reply Like
  • adelito1
    , contributor
    Comments (2) | Send Message
     
    Good question but a complex one. It will depend on how much is exported, how much Brent priced oil is unavailable due to geo-political disruptions ( ISIL in Irak, for one), how much more cheaper Alberta oil sands oil is made available through other non-XL pipeline means of transport etc...but an initial knee jerk reaction will be negative towards refiners that depend on a good Brent-WTI differential to increase profits. However, considering the long term and taking tanker transport costs into consideration, notwithstanding weather related accidents to a tanker of the Exxon Valdez type in the Gulf, WTI will remain cheaper than Brent because we keep finding oil here and less and less major finds are occurring in stable European democracies.
    24 Jun, 09:13 PM Reply Like
  • Mike Everts
    , contributor
    Comment (1) | Send Message
     
    Frosty,
    This is actually token relief and will go nowhere in reducing the glut of light sweet crude which will need to be stored in already full strategic oil reserve salt domes alone the Gulf Coast. Refiners spent hundreds of billions of dollars retooling for heavy crude from foreign sources in the 70's during the oil embargo and will soon hit their refining capacity for the light sweet crude. No doubt we would like to keep our own crude here at home for our domestic use, but until congress approves more refineries (geared toward light sweet crude), we will soon need to export the excess to refineries along the Mexican and Central American Coast. This can only be accomplished by repealing the export ban on crude oil. Otherwise we face catastrophic loss of jobs not to mention $10's of billions in Federal tax revenues.

     

    As to your ridiculous statement about this administration producing more oil than ever before, that sir is a big fat lie! Oil production from federal lands is at an all time low. The increases have come solely from private lands.
    24 Jun, 09:14 PM Reply Like
  • maudie
    , contributor
    Comments (473) | Send Message
     
    Otherwise we face catastrophic loss of jobs…don't give 'him' any more ideas.
    25 Jun, 10:43 AM Reply Like
  • jrp1324
    , contributor
    Comments (77) | Send Message
     
    The shale revolution is an American phenomenon for now. The easiest shale oil is very light oils and light oils as they are able to flow through the rock pores economically. These will not fit available refining capacity. Let the market work! Send the mismatched oil to refiners who are specialized for it. A severe mismatch leads to impaired refining capacity and the U.S. could be forced to import oil products or limit production of light crudes. If the U.S.
    still wants to limit production of our oil then put it on limits like the Texas Railroad commission used to do. Grabbing hold of the export law as a battle cry is a populist tool for politicians and undeserving of a rational discussion among investors.
    25 Jun, 12:22 AM Reply Like
  • machiavelli
    , contributor
    Comments (496) | Send Message
     
    USA ramped up production of oil from 5mbopd to 10mbopd in the last 15 years. Now, the question is, has this affected pump prices? No. Refined gasoline has become USA's #1 export so of course pump prices would not be affected. The "drill baby drill" camp are clueless.
    25 Jun, 12:52 AM Reply Like
  • WMARKW
    , contributor
    Comments (10383) | Send Message
     
    We've gone from 144,000 bpd of finished motor gasoline in 2000 to 420,000 bpd in 2013. That's something less than $17 billion per year at $110 per barrel. I suspect our airplane exports are larger. Oil exports accounted for $148 Billion in 2013.
    25 Jun, 08:48 AM Reply Like
  • maudie
    , contributor
    Comments (473) | Send Message
     
    Job, baby, jobs!
    25 Jun, 10:47 AM Reply Like
  • machiavelli
    , contributor
    Comments (496) | Send Message
     
    WMW, I just looked to check you facts and you forgot to add light and heavy fuel oils to the gasoline numbers which adds up to $73billion in refined fuel products exported but still less than the $105billion aircraft exports as you correctly stated. But I'm not sure why you say oil exports were $148billion? I thought it was established that the USA cannot export unrefined oil? Did you get my point?--that the massive upswing in terrestrial oil production and refining has not made a difference to the price at the pump and never will. Also, to those screaming for jobs, there is a huge upswing in geriatric care needed in the USA. Plenty of jobs there and in the healthcare industry in general. Personally, I'd prefer more high tech design and manufacturing but we leave that to Asia more and more these days.
    25 Jun, 05:02 PM Reply Like
  • Gtoz
    , contributor
    Comments (181) | Send Message
     
    @machiavelli, part of the problem with gas at the pump prices remaining so high relative to our production is the somewhat contrived, sem-annual, formulation regulations. How many regional blends are mandated? Winter gas vs Summer gas, state vs state, region vs region.
    25 Jun, 06:07 PM Reply Like
  • ChuckXX
    , contributor
    Comments (1132) | Send Message
     
    Why just those two companys??? Isn't that favortism???
    25 Jun, 08:37 AM Reply Like
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