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WRAPUP 1-BP to export US crude to Canada, Shell seeks permit

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By David Sheppard and Chris Baltimore

NEW YORK/HOUSTON, Oct 11 (Reuters) - Oil major BP Plchas secured U.S. government permission to ship U.S. crude oil toCanada, and Royal Dutch Shell has applied for an exportlicense, as rising production in the world's top oil consumerupends global energy flows.

A surge in output from shale oil reserves in the Bakken ofNorth Dakota and Eagle Ford of Texas has raised U.S. domesticproduction to the highest level since 1995, light, sweet crudethat could fetch better prices on international markets. TheUnited States still imports more than 8 million barrels per day,making it the world's biggest importer.

BP Plc received a crude export license this summerfrom the Bureau of Industry and Security, a branch of the USCommerce Department, to ship crude oil to Canada, a sourcefamiliar with the issue said on Thursday. BP has yet to exportany crude oil on that license, the source said.

"We have applied to the Department of Commerce to exportdomestic U.S. crude oil," Shell spokeswoman Kayla Macke toldReuters, adding that as a global commodity, imports and exportswould follow supply and demand.

Macke declined to comment on the likely export destinationsor the volumes of crude involved.

A nearly century-old U.S. law requires companies to get aspecial license to export crude oil. Until recently, there hasbeen no demand for overseas shipments, apart from a trickle ofcrude from Alaska that has been routinely exported.

The Financial Times first reported the news, sayingSwiss-based trading firm Vitol applied for a license, citingpeople familiar with the matter.

"Other than routine movement between Canada and the UnitedStates, we have not been involved in any crude oil exportrequests," a Vitol spokesman said.

Experts say some U.S. crude oil has routinely moved throughCanada or has been refined over the border, but must bereimported to the United States.

The FT said the Department of Commerce refused to confirm ordeny the existence of license applications or licenses, butquoted the DOC as saying exports to Canada had a "presumption ofapproval".

But domestic U.S. refiners, especially on the Gulf Coast,were built to process cheaper, heavier types of crude fromMexico or Saudi Arabia, and are often ill-suited for refiningthe lighter crudes and natural gas liquids created by the U.S.boom in hydraulic fracturing or 'fracking'.

(Reporting by David Sheppard and Jonathan Leff; additionalreporting by Chris Baltimore in Houston and Timothy Gardner inWashington; Editing by Gary Hill)

((d.sheppard@thomsonreuters.com)(+1 646 223 6057)(ReutersMessaging: d.sheppard.thomsonreuters.com@reuters.net))

Keywords: USA CRUDE/EXPORTS