Ending ban on oil exports would mean cheaper gasoline, energy executive says

Should the government end its 40-year-old ban on exporting crude oil, the nation would enjoy benefits ranging from jobs to a decline in gasoline prices, an oil industry economist said in a talk this week in San Antonio.

ConocoPhillips senior economist Helen Currie, citing a study by the energy consulting firm IHS Inc., said prices at the pump would fall by about 8 cents a gallon should crude exports be allowed.

Lifting the ban would allow the world’s refineries “to be able to make more gasoline and diesel because it would allow more efficient allocation of crude oil around the world,” she said.

In addition, “we’d get a lot more jobs if we allow crude exports — roughly an additional 1 million jobs” for the years 2016 to 2030, according to the IHS study, Currie said.

U.S. geopolitical standing also would improve, she said, “and it would probably smooth out some volatility we see in crude prices.”

At Houston-based ConocoPhillips, Currie oversees long-range planning, investment analysis and strategic initiatives. She spoke Thursday night at the World Affairs Council of San Antonio.

The nation is producing more crude oil because of the “shale revolution” that began with drilling in North Texas’ Barnett Shale.

“Once they figured out a secret recipe of combining the hydraulic fracturing and horizontal drilling,” she said, “that just unlocked a tremendous amount of resource addition to the country.”

The nation’s most important shale plays are the Eagle Ford, West Texas’ Permian Basin, and the Bakken in North Dakota.  ConocoPhillips is active in all three.

The nation’s oil production bottomed out in about 2008. “Then the Bakken really starting coming online, and the Eagle Ford came on like gangbusters right behind that. So production has increased very rapidly in just a few years.”

Looking ahead, U.S. oil production is predicted to peak at about 12 million barrels a day “a few years out,” she said. “For years, we thought our peak was about 11 (million barrels a day), and we fell down to 7.5 (million barrels a day). Now we’re talking about producing 10 or 12 in just a few years — and maybe more.

“That’s a big deal,” Currie said, because it has helped the United States return to being a major oil superpower.

Even so, the nation will continue import oil from a number of countries, including the Middle East. “That’s just the nature of how the markets work,” she said.

Yet the United States probably won’t import much light crude oil from the Middle East because of production from the Eagle Ford and other shale plays.

Mexico presents another opportunity for shale development as it opens development to foreign investment.

ConocoPhillips “is excited” to see what Mexico’s final rules will be and how the company can do business in Mexico, she said.

Shale production also has contributed to rising amounts of natural gas, which is increasingly used to fuel power plants.

“More gas used in power generation creates far fewer greenhouse gas emissions than does coal,” Currie said.

In addition, rising natural gas production from shale plays has kept prices relatively low. The lower price is aiding manufacturing, she said.

Likewise, chemical feed stocks from natural gas liquids are in abundant supply, particularly along the Gulf Coast. That, too, is attracting investment and helping manufacturing return to this country, she said.

The U.S. is expected to become a net exporter of natural gas, with many liquefied natural gas export plants being proposed.

“We don’t think most of those will be built,” Currie said, because of the expense of construction and permitting. “They are multi-billion facilities.”

Although one LNG plant is being built by Cheniere Energy  in Louisiana, “all of the others are still getting talked about,” Currie said. “I’d wager that not many of them will happen.”