Oil and Gas

White House reviews crude oil export ban

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The White House is examining the longstanding U.S. ban on exports of crude oil, a senior official said, offering the Obama administration's most detailed statement yet of its thinking on the issue.

John Podesta, who is one of President Barack Obama's most senior advisers, said the administration was "taking an active look" at the strains caused by the U.S. shale oil boom.

His comments indicate that the administration is actively discussing one of the hottest topics in U.S. energy policy. Any change would have implications for global oil traders, refiners and consumers.

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U.S. oil production has surged from its 2008 nadir as drillers developed ways to unlock supplies from shale formations.

Exporting crude pumped in the U.S. is essentially barred to any country but Canada. Although the bulk of U.S. export curbs date back to legislation passed in 1975, the White House has authority to loosen them.

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Domestic output gains have been especially dramatic in the Eagle Ford shale of Texas and Bakken shale of North Dakota. North Dakota's oil production has risen more than fivefold in the past five years to 951,000 barrels per day in February, while Texas' has more than doubled to 2.9m b/d.

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The light, low-sulphur quality of shale oil is ill-suited to much of the refining infrastructure lining the Gulf of Mexico, which was designed to process heavier barrels from countries such as Saudi Arabia and Mexico. Commercial crude oil stocks on the Gulf coast are now above 200m barrels, a record high, leading some to warn of a looming glut.

Asked Thursday about the administration's thinking on crude oil exports, Mr Podesta said: "We're taking an active look at what the production looks like, particularly in Eagle Ford, in Texas, and whether the current refinery capacity in the U.S. can absorb the capacity increase to refine the product that's being produced."

"We're taking a look at that and deciding whether there's the potential for effectively and economically utilizing that resource through a variety of different mechanisms," he told a conference at Columbia University's Center on Global Energy Policy in New York.

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The Obama administration has so far been reticent on the issue of the export ban. The Department of Commerce, which administers export licences for crude oil, has given no indication of any policy changes.

Lawmakers including Mary Landrieu and Lisa Murkowski, the Democratic chair and Republican ranking member of the U.S. Senate energy committee, respectively, have urged the government to look into easing the ban.

The oil industry is conflicted, with producers firmly behind freer trade in crude and refineries divided on whether to keep the export ban.

The Energy Information Administration, an independent research wing of the U.S. Department of Energy, has said it will examine the impact of U.S. crude oil exports on global markets.

Mr Podesta formerly led the Center for American Progress, a Washington think-tank which supports keeping the export ban in place.