Senators campaign to end ban on crude oil exports

Sen. Lisa Murkowski, R-Alaska, center, smiles as she speaks about Keystone XL, accompanied by Sen. John Hoeven, R-N.D., left, sponsor of the Keystone XL pipeline bill, and Senate Majority Leader Mitch McConnell of Ky., Thursday, Jan. 29, 2015, on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)
Sen. Lisa Murkowski, R-Alaska, center, with Sen. John Hoeven, R-N.D., and Senate Majority Leader Mitch McConnell of Ky., Jan. 29, 2015, on Capitol Hill. (AP Photo/Jacquelyn Martin)

WASHINGTON — A group of senators unveiled the chamber’s first major legislative plan for lifting the nation’s longstanding ban on crude exports on Wednesday.

The measure, spearheaded and sponsored by Sen. Lisa Murkowski, R-Alaska, would put crude and a light oil known as condensate on the same legal footing as gasoline, diesel and other petroleum products, which can be exported freely, without special Commerce Department licenses.

A dozen cosponsors have signed on to the bill, with Sen. Heidi Heitkamp of North Dakota the lead, and only, Democrat so far to join the effort.

Heitkamp said the bill is essential to give an “upgrade” to the 1970s-era ban on exporting U.S. crude, which she called “as outdated as the typewriters on which the policy was written.”

“By doing away with this nonsensical, out-of-date ban on U.S. crude exports, we can fully harness our resources here at home, level the playing field in the global energy market, and support our energy security by making sure our allies get energy resources from us instead of volatile regions,” Heitkamp said.

The legislation takes a broader approach than other export bills introduced in the House, and even an an oil export amendment advanced by Sen. Ted Cruz, R-Texas, earlier this year.

Its central goal is still authorizing exports of all crude and condensate produced in the United States — except for emergency supplies in the Strategic Petroleum Reserve.

But it also aims to boost the handling of oil, gas, and electricity flowing across the United States’ borders with Canada and Mexico, by authorizing more data about the activity to be shared with the neighboring countries. The bill also would give the Energy Department the lead role in coordinating work involving shared energy infrastructure that crosses the nation’s borders.

The Murkowski-Heitkamp bill also would create a new, standardized definition for the ultra-light oil known as condensate that is now flowing out of Texas wells. Condensate can exist as a gas underground but be a liquid at normal above-ground pressures and is so light it has sometimes been referred to as “natural gasoline.”

The Commerce Department’s Bureau of Industry and Security has said companies can export condensate without a license as long as they at least lightly distill it. Murkowski’s bill would affirm that decision that effectively put processed condensate in the same category as refined petroleum products.

Oil producers are eager for the chance to sell their crude overseas, in hopes that it will give a modest boost to discounted U.S. prices. And in Congress, export champions have advanced an evolving, three-pronged argument for those foreign sales, insisting they would help the economy, boost the United States’ ability to help allies around the world and ensure that U.S. producers don’t get battered when Iranian oil returns to the global market.

Read more: U.S. crude export ban is a sanction against ourselves, Murkowski says

The Murkowski-Heitkamp bill is a long way from securing the 60 votes that are needed to overcome filibusters in the Senate. And notably, the original cosponsor list does not include some Democrats — such as West Virginia’s Joe Manchin — who have signaled they could endorse exports.

Related story: Lawmaker suggests grand bargain to allow oil exports

But if Murkowski pushes the measure through her Energy and Natural Resources Committee on a bipartisan vote, that could add fuel to the export campaign.

A coalition of oil producers and industry trade associations lauded the bill Wednesday, insisting that exports would help sustain domestic crude production.

“Production growth cannot continue at expected rates if the market is curtailed,” said the American Petroleum Institute, Independent Petroleum Association of America, Producers for American Crude Oil Exports and other groups. “Much like the export of gasoline and diesel fuels from American refineries now helps keep refining jobs in America, oil exports will enable the U.S. to invest in more American shale development and keep those good jobs here.”

Current law already allows limited crude exports — mainly those involving some Californian and Alaskan supplies and shipments to Canada. Mexico’s state-owned petroleum company, Pemex, has asked U.S. Commerce Department officials to approve an exchange of its heavy crude for higher-quality, lower-sulfur U.S. oil.

Read more: Senators push for oil export deal with Mexico

Some refiners are eager to preserve the status quo. Allowing widespread oil exports — without also modifying longstanding Jones Act restrictions forcing them to use American-flagged and -crewed vessels to cart crude around the United States — could mean they pay more per barrel, after factoring in shipping costs, than competitors in Europe.

Environmentalists also have been critical.

“Repealing the ban would open the floodgates to more crude oil extraction and the burning of petroleum products, which would worsen the impacts of climate disruption,” said Marcie Keever, director of the oceans and vessels program at Friends of the Earth. “Keeping the crude export ban in place would help to keep this dirty, dangerous, climate-disrupting fossil fuel in the ground where it belongs.”