US Congress leaders agree to end 40-year oil export ban

[webfact]

US Congress leaders agree to end 40-year oil export ban



WASHINGTON: -- US Congressional leaders have agreed to lift the country’s 40-year-old ban on oil exports, a historic action reflecting the impact of a boom in US oil drilling.

The move is a priority for Republicans and the oil industry – and the deal, which covers government spending too, will also see environmental and renewable measures adopted that the Democrats sought.

More than a dozen independent oil companies have been lobbying Congress to lift the export ban.

Production has risen by nearly 90 percent in recent years with the increased use of fracking and other drilling technologies.

The ban came in after a 1973 Arab oil embargo that sent domestic petrol prices soaring.


-- (c) Copyright Euronews 2015-12-17

[NeverSure]

The US has more proven oil reserves than all of the rest of the world combined. There is no reason for allies to have to rely on Russia or the ME for oil.

Canada also has a ton of oil and can be a supplier if needed. This could put the hurts on the economies of some of the oil-dependent rogue countries. Good move.

Cheers.

[Suradit69]

Since the US is still a net importer, it won't do much to the overall supply/demand situation, but might reduce the spread between WTI and Brent. Even with that news, WTI is only a bit over $35. Shipping oil from the US to most countries that want it would be more costly than from the Middle East or Russia, which will probably be reflected in the price differential. On the other hand, WTI is lighter and sweeter than crude from other countries, including Canada.

As recently as Tuesday the spread was down to a historical low of 20 cents (see chart) although it's widened today.

Probably the biggest beneficiaries will be the oil transporters and pipelines that may have increased volumes to move about.

The freedom to export LNG could be interesting as well, but the supply/demand dynamic for natural gas has been bad for pricing. Right now the January contract for gas is down to $1.82, a 13 year low.

Edited December 17, 2015 by Suradit69

[oneday]

Recent increases in oil production in the US should be a game changer...at least I hope so.

[h90]

The US has more proven oil reserves than all of the rest of the world combined. There is no reason for allies to have to rely on Russia or the ME for oil.

Canada also has a ton of oil and can be a supplier if needed. This could put the hurts on the economies of some of the oil-dependent rogue countries. Good move.

Cheers.

are these easy to extract reserves? It is also said the Saudi Arabia has the biggest reserves and cheapest to get. But I guess all these statistics are cheated in one way or the other.

[GOLDBUGGY]

The US has more proven oil reserves than all of the rest of the world combined. There is no reason for allies to have to rely on Russia or the ME for oil.

Canada also has a ton of oil and can be a supplier if needed. This could put the hurts on the economies of some of the oil-dependent rogue countries. Good move.

Cheers.

are these easy to extract reserves? It is also said the Saudi Arabia has the biggest reserves and cheapest to get. But I guess all these statistics are cheated in one way or the other.

Saudi Arabia has the greatest oil reserves of "Conventional Oil". Which is oil in the ground that is either free flowing or can easily be pumped out of the ground (Oil Well). As a result, "Conventional Oil" is also the cheapest to produce. Saudi Arabia can probably pump oil out of there reserves at a cost of $10/ bbl.

Then you have "Unconventional Oil". Like the "Tar Sands" (sand enriched with oil). "Heavy Oil" (Oil too thick to pump out of the ground like Conventional Oil) and "Fracking Oil" (Oil enriched rock which traps oil and needs to be bombarded "sandblasted" to crack this rock "Fracking" to release the oil to pump out). Unconventional Oil therefore requires more processing to extract this oil, and therefore makes this more expensive to produce. With a cost price range of $40 / bbl to $80 / bbl, and in which for Tar Sands also includes how much oil is entrapped in the certain area of sand.Or in other words how rich in oil the Tar Sands are.

To understand who has the greatest Oil Reserves you first need to understand what Oil Reserves are and how they are counted. Oil Reserves are basically oil in the ground that can be economically extracted and used. So the amount of Oil Reserves a country possesses really has more to do with the price of oil then the amount of oil a country has.

For example at $100 / bbl of oil, almost all of Canada's Tar Sands can be counted as Reserves because at that price the oil can be extracted from the ground and sold at a profit. So at $100 / bbl Canada would have more Oil Reserves than Saudi Arabia. But at $130 / bbl Venezuela Heavy Oil becomes economical to, and thus it would have the greatest Oil Reserves, followed by Canada, and then Saudi Arabia in 3rd place. Russia is still unknown but at these prices it can jump into any of these places and be anywhere from 1st to 4th place.

But at the present price of $35 / bbl, this pretty well knocks out all Unconventional Oil. So at this price Saudi Arabia has the most Oil Reserves. What Saudi Arabia appears to be doing is it is trying to over supply the world with cheap oil with the hope of knocking out the Unconventional Oil Produces. If successful, these Unconventional Oil Produces would have to shut down, as they would be losing money, thus would eventually cause a natural shortage in oil, which in turn would cause the oil prices to go up, and without Saudi Arabia having to cut its production.

Who says you can't manipulate the Markets? You only can't if you are an American Company with your home base in the United States.

[GOLDBUGGY]

Since the US is still a net importer, it won't do much to the overall supply/demand situation, but might reduce the spread between WTI and Brent. Even with that news, WTI is only a bit over $35. Shipping oil from the US to most countries that want it would be more costly than from the Middle East or Russia, which will probably be reflected in the price differential. On the other hand, WTI is lighter and sweeter than crude from other countries, including Canada.

As recently as Tuesday the spread was down to a historical low of 20 cents (see chart) although it's widened today.

Probably the biggest beneficiaries will be the oil transporters and pipelines that may have increased volumes to move about.

The freedom to export LNG could be interesting as well, but the supply/demand dynamic for natural gas has been bad for pricing. Right now the January contract for gas is down to $1.82, a 13 year low.

True that the US is still an Importer of Oil. As of 2014 they imported about 5 Million bbl / d, of which 37% came from Canada. But I think we will see different figures for 2015 as US Oil Production has gone up since then.

I don't see how you see the connection between W.T.I and Brent Oil Pricing, but I would like to hear that. Brent is sold in Europe and in which much of it comes from the North Sea. North Sea Oil is Capital Intensive and as a result adds to the cost of every bbl of oil they produce. But tradition this oil has almost always been higher then more conventional oil in the US, like W.T.I. But it is true that the spread between W.T.I and Brent is very low right now. Not sure why exactly.

When the American Oil Companies put in there application to the US Government to approve Export Licenses for Oil, it was selling at over $100 / bbl. Today Oil sells for $35 / bbl. A lot has changes since then. We are not likely to see any oil exported from the USA. If anything we will see imports going up again. The main reason being that you can't produce cheap oil in the United States. Fracking Oil costs around $50 to $60 / bbl to produce, and where most of this new found oil is coming from.

So even at a cost of $50 / bbl you may try to keep the company alive and store as much oil as you can, and then hope for better days when you can sell for a higher price. But what you are not going to do is produce oil at $50 / bbl, pay someone to transport it then ship it for you at a cost as high as another $8 /bbl, and then sell it at a loss at $35 / bbl. So no sense in the government in trying to fool the Public, or the Saudis, into thinking you plan to export oil. You will export nothing!

Now LNG Export is a totally different kettle of fish. Much of this Natural Gas comes as a byproduct from oil extraction, although not all. I suspect that the huge surplus in Natural Gas now comes from Oil Fracking.But unlike Oil, Natural Gas is more difficult to store. Natural Gas is a cleaner form of fuel and thus used a great deal in homes for heating. It is also used in Power Generation but Coal is still and by far a cheaper fuel to use for that.

Where the big difference that lies in LNG Export compared to Oil Export is how they set things up for LNG. LNG Gas Plants and Export Terminals are very capital cost intensive. To justify this huge cost they first set up agreements with the sellers to buy Natural Gas at a set price for very long term, which usually requires 10 or 20 year contracts. Then they also to sell this LNG to the buyers for the same long term agreements. There is some flexibility built into these contracts but not that much.

So in essence you have a contract to buy gas at a certain price over a very long period, and also to sell it as LNG at a certain price over a very long period, so you already know you will make a profit and what it will be. So you take the risk out of the equation with spot prices or not having a seller or buyer when you need one. To leverage there risk it is very common for the long term sellers, and the buyers, to invest in the LNG Gas Plant. You just have to look at it this way. Many times you will see the Spot Price of Natural Gas go down, or up. How often have you seen your Utility Bill do that? . .