Will the Commerce Department’s Approval to Export Condensate Change the World?

by Moore & Van Allen PLLC
Contact

The reporting in late June of the Commerce Department’s private rulings that authorized two companies to export condensate has ignited discussions regarding the real prospect of changes in U.S. oil export policy. Industry participants reportedly have viewed the Commerce Department rulings as “a major opening for the U.S. energy industry, and not simply a technical tweak to existing rules.” The Commerce Department stated that crude oil export policy remains unchanged, despite having classified condensate that had been processed through a distillation tower as a petroleum product that can be exported without a license in those private rulings.  Broadening the reach of the two private rulings to others in the industry and other forms of oil were reported to be hot topics at the U.S. Energy Information Administration’s Energy Conference held on July 14-15 in Washington, DC. One energy industry executive is quoted as declaring that “[w]hat we have now has changed the world.”

The Commerce Department’s rulings have prompted responses from Congress as well.  On July 2, Senators Edward J. Markey and Robert Menendez sent a letter to Secretary Pritzker inquiring about the Commerce Department rulings and stating that the “private rulings may have been issued in contravention of the longstanding ban on export on U.S. crude oil, which also prohibits the export of lease condensate.” The Senators requested copies of the private rulings and a written response to eight questions regarding the Commerce Department’s rulings and their potential impact on crude oil exports by July 14.

To the contrary, Senator Lisa Murkowski has supported the export of condensate, stating that “[c]ondensate exports are an easy first step on the road toward a broader lifting of the oil export ban.” On July 9, Senator Murkowski released a report titled Terms of Trade: Condensate as an Exportable Commodity, which advocates for the U.S. Commerce Department to treat condensate as a form of petroleum that is distinct from crude oil for purposes of export policy. The report points to those federal agencies responsible for oversight of offshore and onshore hydrocarbon production, which consider condensate to be distinct from crude oil and even categorize it as a “natural gas liquid.” The report notes that other natural gas liquids (e.g., propane, natural gasoline, etc.) may be exported and suggests that the Commerce Department “bring its regulatory structure into greater alignment” by “further authorizing exports of processed condensate and even updating its regulations to allow all condensate to be exported freely to global markets.” The report asserts that “[t]he Commerce Department’s decision to authorize exports of processed lease condensate as a petroleum product – just as unfinished oils are allowed for export today – is entirely consistent with federal regulations.”

The following week, after discussing the Commerce Department’s approach to crude oil and condensate exports with Secretary Pritzker, Senator Murkowski stated that she was “encouraged” and “Commerce’s recent action classifying processed condensate as a petroleum product under its existing regulations is a step in the right direction.” It was reported last week, however, that the Commerce Department has stopped the processing of some pending requests for permission to export condensate and has told companies that their requests are being “held without action.”

One headline last week read “Condensate Leaves U.S. Shores As Industry Demands Export Guidelines,” noting that “A tanker loaded with $40M of ultralight oil departed Texas for South Korea late [Wednesday] night, marking the first unrefined American oil export since the 1970s.” It remains to be seen how many others will follow and how soon.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Moore & Van Allen PLLC | Attorney Advertising

Written by:

Moore & Van Allen PLLC
Contact
more
less

Moore & Van Allen PLLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!