Oil groups in rush for US crude export licences
Oil companies are securing licences to export U.S. crude at the fastest rate since records began, as the shale boom leads to swelling supplies along the Gulf of Mexico.
The U.S. government granted 103 licences to ship crude oil abroad in its latest fiscal year, up by more than half from the 66 approved in fiscal 2012 and the highest since at least 2006, according to data obtained by the Financial Times.
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All but a dozen of last year's licences were to Canada, where companies may buy U.S. crude as long as they refine it there.
The clamor for licences had appeared unlikely because Canada is the top foreign oil supplier to the U.S.
But huge production gains in states such as Texas, coupled with restrictions on coastal tanker movements to U.S. refineries, mean shipping cheap Gulf coast crude to eastern Canada makes economic sense. Light Louisiana Sweetcrude from the Gulf coast now trades at a deep discount to Brent, the global benchmark.
Exports to Canada totaled 99,000 b/d in September, the latest official data show. Physical traders estimate U.S. crude exports to Canada are now approaching 200,000 b/d, the highest in more than a decade.
Valero, the biggest North American refiner, has received a licence to export up to 60,000 barrels per day of Eagle Ford crude from Texas to its refinery in Quebec, eastern Canada.
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Irving Oil, which owns Canada's biggest refinery, has been buying U.S. crude delivered by vessel and railway. The oil train that derailed in Lac-Mégantic, Quebec this year, killing 47, was headed for Irving's operation in New Brunswick province.
More than 3.3 million barrels of U.S. crude have been exported to Canada from the Port of Corpus Christi in Texas in the 11 months to November, said Dennis De Vries, director of finance. The sum is a 10-fold jump from volumes in 2012.
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U.S. crude oil exports have been tightly restricted since 1975, when the country was reeling from the Arab oil embargo. All would-be exporters must obtain licences, including for shipments to Canada.
Jake Dweck, partner at the Sutherland Asbill & Brennan law firm,said: "Companies, particularly traders, often obtain licences to make sure they have the option to act if the market opportunity arises. So some end up actually using their licences while others just sit on them."
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The government data show the U.S. Bureau of Industry and Security last year also issued two export licences a piece to China, Italy, Mexico and South Korea; three to Panama and one to Singapore.
The BIS did not divulge the nature of these licences. Experts believed they were issued for the potential shipment of Canadian crude via the U.S. or for other foreign crude to be temporarily parked inside the U.S. as a way station.
In January the U.S. exported 9,000 b/d of crude to China, which the Energy Information Administration called a "rare event" that probably came from oil imported to the U.S. and then exported again.