Processed condensate not covered by export ban

Jan. 5, 2015

New guidance issued by the Bureau of Industry and Security (BIS) could lead to an increase in U.S. exports of condensate, a form of lightly processed crude oil.

New guidance issued by the Bureau of Industry and Security (BIS) could lead to an increase in U.S. exports of condensate, a form of lightly processed crude oil, Bloomberg reported.

The agency, part of the U.S. Department of Commerce, said last week that liquid hydrocarbons that have been processed through a crude oil distillation tower are classified as petroleum products rather than crude oil. That means they are not covered by the U.S. ban on exports of crude oil.

With new drilling techniques leading to a boom in U.S. oil production, there are growing calls to revise the nation's four-decade-old export ban.

Last year the Department of Commerce approved requests by some companies to export lightly refined condensates, and Commerce Secretary Penny Pritzker said the department was re-examining its policy on crude oil exports.

Although the latest guidance does not end the prohibition on most crude exports, it sets out what oil producers can do to avoid violating export laws.

BIS stated: "In order for liquid hydrocarbons to be classified as petroleum products, there must be material processing through a crude oil distillation tower. If there is no processing in the distillation tower, or the processing is de minimis, the liquid hydrocarbons will not qualify as petroleum products.

"Processes that utilize pressure reduction alone to separate vapors from liquid or pressure changes at a uniform temperature, such as flash drums with heater treaters or separators, do not constitute processing through a crude oil distillation tower. Crude oil processed through such equipment remains classified as crude oil."

By setting out the requirements in detail, this update might "open up the floodgates to substantial increases in exports" by the end of 2015, according to a research note published by Citigroup Inc.
 

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