You are here

Oil CEOs said to ask Obama administration to lift export ban

Friday, March 13, 2015 - 09:26
whitehouse130315.jpg
About a dozen US drilling executives, including ConocoPhillips Chief Executive Officer Ryan Lance, were in Washington this week trying to persuade White House officials and lawmakers to lift the 40-year ban on US oil exports, according to two people familiar with the meetings.

[WASHINGTON] About a dozen US drilling executives, including ConocoPhillips Chief Executive Officer Ryan Lance, were in Washington this week trying to persuade White House officials and lawmakers to lift the 40-year ban on US oil exports, according to two people familiar with the meetings.

Chief executives from the lobbying group Producers for American Crude Oil Exports, or PACE, met with White House senior energy policy adviser Brian Deese March 11 to ask the Obama administration to roll back a prohibition on most US oil exports imposed after the 1973 Arab oil embargo, according to two people, who asked not to be identified because the discussions weren't public.

Producers are eager to lift the ban because oil in the US is selling for about US$10 less than the global benchmark. An end to the ban would allow US producers to sell for higher prices.

CEOs from eleven of PACE's 16 member companies flew to Washington for meetings with administration officials and lawmakers, including Marathon Oil Corp. CEO Lee Tillman, Chesapeake Energy Corp CEO Doug Lawler and Occidental Petroleum Corp. CEO Steve Chazen, according to the group. They also briefed federal officials and lawmakers on market conditions, including industry job cuts, oil-production levels and the idling of oil rigs, said one of the people who was briefed on the discussions.

"We've had a series of very productive meetings with senators from both parties and the administration and look forward to continuing those conversations in the months ahead," PACE Executive Director George Baker said in a statement.

Frank Benenati, a White House spokesman, didn't respond to a request for comment.

Administration officials, including Energy Secretary Ernest Moniz, have called the restrictions antiquated, and they are being reviewed in a years-long study in the department.

US energy policies severely restrict crude exports while applying no such limits to products processed in refineries. US refiners are exporting record amounts of gasoline while producers contend with depressed oil prices. The US has surpassed Russia and Saudi Arabia as the world's largest producer of oil and natural gas, according to the US Energy Information Administration.

Exxon Mobil Corp CEO Rex Tillerson urged the government and Congress to allow US exports of oil and natural gas.

"With free trade in energy and common-sense regulatory reforms, the US energy industry can strengthen US energy security and continue to pioneer the innovations that make possible the safe and responsible development of energy," Mr Tillerson said in remarks Thursday to the Economic Club of Washington, according to an Exxon statement.

Executives also met on Capitol Hill with aides to Senator Lisa Murkowski, chairwoman of the Senate Energy and Natural Resources Committee. Murkowski, a Republican from Alaska, has publicly backed lifting the ban on US oil exports and is working on a broad rewrite of US energy laws.

"We've been holding a series of listening sessions and PACE has been part of that," said committee spokesman Robert Dillon. Oil executives met with Republican and Democratic committee staff this week. "As we start to draft legislation, we want to make sure we gather all the ideas. We want to hear from everybody." Producers calling for an end to the ban have been beset by the biggest oil-market crash since 2009, which has made it harder to turn a profit by drilling in shale, a technological achievement that helped unlock a boom in North American supply.

Last year, the Department of Commerce began to clarify some rules relating to a kind of ultra-light crude called condensate. That review allowed companies including Pioneer Natural Resources Inc. to export condensate after a minimal amount of processing, akin to existing regulations that allow refined products such as gasoline and diesel to be exported.

It isn't clear how much exports have increased because of those allowances, since government data doesn't release a separate tally of how much condensate has been shipped abroad. US crude exports rose 11 per cent in January from December, to 491,000 barrels a day, according to Bloomberg calculations from US Census Bureau data. Of that total, 400,000 barrels a day went to Canada, where US producers and traders are allowed to export under federal rules.

BLOOMBERG