Expert: White House likely to lift oil export ban

The White House “will favor” lifting the nation’s 40-year-old ban on exporting oil, a leading energy expert said Wednesday at a symposium in San Antonio.

Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis, said she expects the administration to lift the ban on oil exports as a way to shield itself from criticism as it delays making a decision on the Keystone pipeline.

“It’s not in our interest to hold our oil and gas inside our borders,” Jaffe said during the symposium, sponsored by locally based South Texas Money Management. “If we don’t export oil and gas from the United States, (it) is going to flow to Canada or Mexico as it’s already doing — and they’re going to export their oil and gas, and it’s going to be the same thing.”

That’s because the nation has a free trade agreement with Canada and Mexico, she added, and “we’re not thinking about turning it off.”

The United States should get “some of the benefit” of exporting oil, Jaffe said.

On Tuesday, top U.S. energy officials that included Energy Secretary Ernest Moniz said they’re considering easing federal laws that prohibit exports of most crude, the Wall Street Journal reported. On Friday, a senior counselor to President Barack Obama said the administration is looking at rising production in shale plays such as the Eagle Ford to determine whether refineries have enough capacity to process the oil, the Journal said.

Symposium speaker Arthur Berman, director of Labyrinth Consulting Services Inc., said he expects U.S. natural gas prices — which now average about $5.04 per thousand cubic feet — “will continue to improve.”

That would be a good thing because Berman said the balance sheets of natural gas drillers “stink.”

“They don’t reflect success,” he said, “The companies involved in these plays aren’t making money,” as many are reaping just $4 per thousand cubic feet for natural gas yet have expenses of $2 per thousand cubic feet.

What’s more, unconventional gas production — in tight rock formations — is flat or in decline, except for the Marcellus Shale, Berman said.

“U.S. natural gas production growth is a single bet on the Marcellus,” he added. “A lot of things can go wrong when you bet everything on a single play.”

There have been predictions that the United States could rescue Europe and bring Russia’s President Vladimir Putin “to his knees with our unbelievable volumes of natural gas,” Berman said.

But “the U.S. needs to get over itself as a natural gas superpower. We’re a punk. We’re in fourth place. I don’t want to play that David-and-Goliath game with Russia,” he said.

Geopolitical strategist Peter Zeihan said many nations won’t be able to take advantage of the shale revolution — brought on largely by hydraulic fracturing — because of aging populations and a present and future lack of trained experts.

“China, for example, isn’t on track to be a shale power anytime soon,” Zeihan said. “That’s because it’s going to take China about a decade” to develop the right cadre of experts to develop its shale.

By contrast, “Mexico, for a mix of reasons, is going to be the growth story for the next 40 years.”

One reason: Infrastructure that includes new pipelines to Mexico’s population hubs that will be completed by 2016. The idea that Mexico is having problems with manufacturing because of power outages “is about to disappear,” he said.

Speaker Russell Gold, senior energy reporter at the Wall Street Journal, told the symposium audience of his family’s experience with drilling in the Marcellus Shale. His parents and their friends own property in north-central Pennsylvania that they decided to lease to a driller.

“Did it ruin the area? No,” Gold said. But he said fracking is being challenged now, for good reason.

A gathering line from his family’s well was laid under a nearby creek. The line leaked and caused a small fish kill. Pennsylvania didn’t issue any fines, even though regulations say if a stream is disrupted, it’s a violation.

Because of such problems, many are clamoring for rules that would protect groundwater and govern air emissions, and for explanations of earthquake risks. Such problems are manageable, Gold said, “but it doesn’t mean they are being managed.”

In the next few years, Gold predicted that there will be a growing movement to manage the risks “to ensure that the oil and gas boom goes forward as strongly as it has.”