With U.S. oil production at 1980s levels and growing, the debate about whether to export more crude can only get hotter.
The U.S. is now a leading energy producer, pumping 8 million barrels a day, a million barrels more than this time last year, and 2.5 million barrels more than three years ago. There has not been this much oil produced since the late 1980s.
As the energy industry gathers in Houston on March 3 for the annual IHS Energy CERAWeek conference, the topic is sure to be front and center. The first session in fact features Sen. Lisa Murkowski of Alaska, who called in January for an end to the ban on oil exports and has sought to spur debate in Washington.
Alaska is the only state cleared to export crude, and a presidential waiver from current laws would be required to sell most oil abroad from other states.
Daniel Yergin, IHS vice chairman, said the idea of U.S. oil exports will be among many topics at the conference, which will focus on energy and global competitiveness. A big topic will be how the new U.S. role as a major oil and gas producer is changing the U.S. economy and the position of the U.S. in the global economy.
There are also sessions on the logistics for moving this new found bounty by— pipeline and rail—and also on the financing and environmental impacts.
"I think in the oil industry, we're going to hear about the recalibration of investment strategy. Companies are slowing down their capital investment globally; they are being more differentiated in what they do," said Yergin.
"Essentially after prices shot up, people ramped up their budgets, but costs increased as well ... now there's a very strong preoccupation throughout the industry on what it costs."
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U.S. oil futures are currently trading above $100 per barrel, but some experts expect prices to retreat from near four-month highs, pressured in part by higher production. The U.S. industry's output has grown dramatically as drillers used new technologies, like horizontal drilling, to extract so-called tight oil.
"I think the industry is alarmed by rising costs in big projects. What we're also seeing is a repatriation of capital back to the United States. The opportunities are so large. You see many of the large independents refocusing on the United States," said Yergin.
The three oil giants—Chevron, Exxon Mobil and Royal Dutch Shell—spent more than half a trillion dollars over the past five years on megaprojects to tap petroleum deposits needed to replenish depleting fields. The soaring costs and profit declines have gotten a lot of attention recently as earning reports have been announced.
Yergin noted that Murphy Oil just two weeks ago said it is considering the sale of its Asian assets. "This pattern of U.S. independents coming home is a very strong theme," he said.
Other speakers at the conference include Chevron CEO John Watson; Dow CEO Andrew Liveris; BHP Billiton CEO Andrew Mackenzie; Total CEO Christophe de Margerie; and TransCanada CEO Russ Girling. U.S. Energy Secretary Ernest Moniz; Alexander Novak, Russian energy minister; and Dieazani Alison-Madueke, Nigeria petroleum minister, are also participating. Former Fed Chairman Ben Bernanke speaks at the conference Friday.
(Read more: US crude production continues relentless rise)
Graphics by The New York Times
While immediate action isn't expected in Washington on oil exports, the U.S. is already sending some oil and refined petroleum products to foreign buyers.
Refined products are not restricted, and about 1.9 million barrels a day of gasoline and distillates were being exported in the week ended Feb. 21, according to the latest government data. That is seen as a boon for U.S. refineries, which were producing 15.2 million barrels a day, up from 14.4 million at the same time last year.
Another exception from the export rule is the shipment of oil to Canada, which is permitted. About 200,000 barrels a day of U.S. crude oil was being shipped directly to Canada, as of last November.
"That's sort of a modern record," said Edward Morse, global head of commodity research at Citigroup. "It's conceivable we export as much as 400,000 a day to Canada by the end of the year," he said. The oil being sent across the northern border is processed at refineries in eastern Canada, and some of it is shipped back to the U.S. as fuel, he said.
Understandably independent refiners oppose lifting the ban on exports, arguing it will drive up prices. Valero was the first major company to speak out against lifting the ban, and it is one of the companies that has received permission to sell oil to Canada, shipping it to its own Quebec refinery.
There is also the ability to re-export crude from Canada.
"The other thing that is allowed is the re-export ... of Canadian oil out of the U.S.," he said. Morse said there will be about 2 million barrels a day of new pipeline capacity coming on line, even without the controversial Keystone pipeline. "Canadian crude can move by pipeline and be exported," he said, noting it also moves into the country by rail.
There also could be another 100,000 barrels in Alaska crude if the economics work out to send it abroad, Morse said. "It's conceivable the arb will be open to export Alaskan crude at the end of the year. There's a ton of U.S. and Canadian crude being railed into the Pacific. There's a large amount of Mexican crude being exported in the Pacific. There's going to be a glut in California, which should by the end of the year push down prices," he said. That Alaskan crude could then find its way to Asian markets.
Alaska was exempted from the export ban by President Bill Clinton in 1996 when Alaska North Slope production was much higher.
The argument against exporting oil is often focused on national security, and the U.S. has stockpiled crude in the Strategic Petroleum Reserve to make sure there is supply in times of crisis. The U.S. has spent billions securing the transport of oil from the Middle East, and exporting homegrown crude from Texas or North Dakota will surely face opposition. But as the U.S. has increased its own production, reliance on imports has dropped, especially from Africa.
There is also concern exporting crude will push prices higher. There is the same concern that natural gas exports will result in higher domestic prices when the already approved LNG facilities go on line in the next several years.
But some in the industry argue that by not exporting oil, there could be a detrimental impact on production. "Realistically, it's going to be decided on political issues," said John Mayes, director of special studies at industry consultant Turner Mason & Co. In its 2014 outlook, Turner Mason said the U.S. should displace all medium crude imports and reach the "structural" import floor by about 2019.
At that point, the report said the discount of U.S. crudes to the international benchmark Brent could move to double digits "as the entire U.S. becomes an essentially 'stranded' location. This will both depress production and incentivize investment in 'crude-to-product' processing facilities," or refineries.
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There are already a number of refinery expansions underway, and Mayes sees more expansion of refined product exports.
"What we're saying is as U.S. production continues to rise, it will progressively back out larger and larger amounts of foreign, non-Canadian light and medium grades. There's a question of how much we can back out. It's very likely as an example, we'll continue to see some foreign crudes in the U.S. ... We're not expecting to back out 100 percent of the foreign light and medium grades but it will come fairly close," he said.
But it would not likely have much impact on the heavy crudes coming into the U.S., like Saudi Arabian oil, which can be processed on the Gulf Coast, he said.
Mayes said the export question is particularly thorny because it is political. "It's probably the hottest topic right now because the others are more logistical or economically based," he said.
—By CNBC's Patti Domm. Read more stories at Marketinsider.CNBC.Com and follow her on Twitter @pattidomm