U.S. could swap light crude to ease oil boom glut -senator

Thu May 22, 2014 7:59pm GMT
 

By Timothy Gardner

WASHINGTON May 22 (Reuters) - To help shrink its growing glut of oil, the United States could swap light crude to nearby countries without having to issue time-consuming new rules or findings, according to a report released on Thursday by a senior senator.

The debate about overturning a 40-year-old ban on U.S. oil exports has sharpened as the domestic boom is expected to make the United States the world's top crude producer by next year, bigger than both Saudi Arabia and Russia. Brimming supplies could begin to discourage U.S. energy companies from producing crude sometime next year.

Petroleum exchanges between the United States and Canada in the 1970s and 1980s were common exceptions to the ban and should occur now, said the report released by Senator Lisa Murkowski of Alaska, the top Republican on the chamber's energy committee.

Murkowski has advocated for reversing the ban since January, but has no plans yet to introduce legislation on the matter.

The United States and Canada initially worked out petroleum swaps in 1976 after Ottawa instituted its own crude export ban that began to hurt U.S. refineries in Michigan, Minnesota and Wisconsin. The program was blocked by President Ronald Reagan in 1985, but not before tens of millions of barrels of oil were exchanged across the border, the report said.

Similar exchanges could occur between Alaska and Japan. In such trade Alaska could send light oil to Japan, which in turn could arrange for Mexican or Middle Eastern heavy oil to be sent to refineries in Texas and Louisiana, the report said.

The U.S. shale boom has led to a glut of condensates and other light oils that many U.S. refineries have difficulty processing because they have been retooled in recent years to handle heavy oils.

Energy Secretary Ernest Moniz has signaled that the administration of President Barack Obama is looking at options on oil exports, in light of the energy production landscape that has changed rapidly since the 1970s. But the administration is unlikely to take any big steps to overturn the ban ahead of the Nov. 4 congressional elections.   Continued...

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