This has become a very big issue of late

Maritime News
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should the Federal Government allow the export of US produced crude?

[B]U.S. Gulf Coast fills with crude oil that few ships can take out[/B]

NAOMI CHRISTIE and DAN MURTAUGH

HOUSTON, Texas (Bloomberg) – Houston and the rest of the U.S. Gulf Coast have more crude oil than the region can handle.

Stockpiles in the region centered on Houston and stretching to New Mexico in the west and Alabama in the east rose to 202 MMbbl in the week ended April 4, the most on record, Energy Information Administration data released show.

Storage tanks are filling as new pipelines carry light, sweet oil found in shale formations to the coast and U.S. law keeps companies from moving it out. Most crude exports are banned and the 13 ships that can legally move oil between U.S. ports are booked solid. The federal Jones Act restricts domestic seaborne trade to vessels owned, flagged and built in the U.S. and crewed by citizens.

“You can’t get all that light, sweet crude out, it’s all kind of piling up,” said Jeff McGee, the founder of Makai Marine Advisors in Dallas, who previously led research at two shipbrokers and worked as a refinery planner. “You couldn’t find a spot Jones Act ship to save your life right now.”

The glut will make prices of benchmark West Texas Intermediate oil $13 a bbl cheaper than Brent, the international benchmark, later this year from about $5 now, according to Bank of America forecasts. The EIA forecasts the average gap for 2014 will be about $9.

Companies including TransCanada and Enterprise Products Partners built and reversed pipelines that helped a carry a record amount of oil to the Gulf Coast from the Midwest in 2013. Total U.S. production reached 8.23 MMbpd, the highest level since May 1988.

Thirteen tankers can haul crude domestically out of a global fleet of about 2,400, according to the U.S. Department of Transportation Maritime Administration. The Jones Act, a 94-year-old law, requires all domestic seaborne trade to be shipped on vessels crewed by citizens and owned, flagged and built in the U.S.

Meanwhile, a 1975 law bans most overseas U.S. crude shipments. While supplies to Canada, one of the exceptions allowed, have risen to a record, the U.S. exports 3% of the oil it produces, Energy Department data show.

Neither law will change soon. Mariners’ unions and domestic shipping companies say the Jones Act is critical to national security. Lawmakers are discussing ways to extend rather than curtail it, such as by requiring LNG exports to go on U.S. ships.

Even as Senator Lisa Murkowski of Alaska, the senior Republican on the Energy and Natural Resources Committee, added her support to Exxon Mobil’s call to lift restrictions on crude exports, other lawmakers in Congress say they’re concerned shipments would increase gasoline prices at home.

“The ban on exporting United States crude is mainly responsible for the pileup of crude stocks on the Gulf Coast,” said Harry Tchilinguirian, head of commodity markets at BNP Paribas, France’s largest bank. “The Jones Act is an additional hurdle in trying to move that surplus crude on the Gulf Coast to other areas of the United States.”

The glut may start to shrink in the second quarter as refineries ramp up to meet summer gasoline demand. Plants on the Gulf Coast handled a record 7.92 MMbpd of crude last year, equal to almost 80% of Chinese consumption in 2012, according to data compiled by the IEA and Bloomberg. Refinery runs in the region rose by 167,000 bpd to 8.22 MMbpd, EIA data show.

Swelling inventories may also be curbed by falling crude imports, which 2013 averaged the lowest since 1996. U.S. refineries also exported a record 3.1 MMbpd of gasoline, diesel and other petroleum products in 2013, EIA data show. The U.S. allows product exports.

The American Petroleum Institute, which represents the U.S. oil and gas industry in Washington, is developing legal challenges to the crude export restrictions. Overturning the 1975 law would allow the U.S. to ship 1.5 MMbpd and become one of the 10 largest crude exporters, according to JBC Energy, a Vienna-based consulting firm.

I of course say, NO FUCKING WAY!

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I fills agree with you there c.captain!

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I hope to God that the law stays. US export of crude oil would mess up the economy of Norway.

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There are a lot more than 13 Jones Act tankers in the market. Not to mention another 12-16 are on order.

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[QUOTE=c.captain;135113]should the Federal Government allow the export of US produced crude?[/QUOTE]

It is funny how they want to link the Jones Act to an export issue …

As far as export is concerned, the question and the answer are the same, who benefits from exporting what the consumer has to pay more for because the standard excuse is there is always a shortage or threat of a shortage?

If the storage tanks are full, stop pumping oil. Is that so difficult? Who is getting paid to destroy an American industry because $93 billion in profits isn’t enough for the oil companies?

If the oil companies want to sell that oil, let them build more domestic refineries to match production with consumption. Oil is a strategic resource, it is as important to the national security as a healthy merchant marine fleet and for Congress or its corporate handlers to squander either is treasonous.

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I’m not so smart. Aren’t we still importing crude? So why do we have to export it too?

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[QUOTE=steeltoesonplanes;135155]I’m not so smart. Aren’t we still importing crude? So why do we have to export it too?[/QUOTE]

Of course it also asks why we need a Keystone Pipeline and to import sour bitumious crude extracted from the Alberta tar sands?

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The construction of new refineries in the US is very unlikely, the last entirely new refineries were built in the 1980s in WA state I believe. With the political /environmental and NIMBY attitudes, not happening!!

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The US has not build a new refinery since 1979. Due mainly to EPA regulations it would be next to impossible to get the permit. Other refineries, at least in the south, have expanded their facilities on their current permits. However, these facilities have grown to very near max. I also do not believe we should export until we are producing at least 110% our consumption. But, congress needs to reign in the EPA and set up waivers for an expansion of the US refining capabilities. I would even go so far as to say it is a matter of national security.

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You export crude because you need the cash, surely?

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[QUOTE=Number360;135163]The US has not build a new refinery since 1979. Due mainly to EPA regulations it would be next to impossible to get the permit.[/QUOTE]

http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6

http://theenergycollective.com/geoffrey-styles/352711/will-shale-oil-growth-lead-new-us-refineries

Issuing waivers of the Clean Air Act and other anti pollution laws is akin to scrapping the Jones Act so that a few billionaires can bank a few million more. The oil companies made a profit of close to $100 billion last year and that was after hiding and spending every dime they could so they wouldn’t have to call it profit. I think they can afford a billion or so extra to build a clean refinery or two.

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[QUOTE=powerabout;135202]You export crude because you need the cash, surely?[/QUOTE]

Yeah, we could strip mine the whole continent and clear cut every tree to make a few bucks too. How many of those dollars do you think will go into paying off the national debt or improving the health and welfare and security of the American citizen who isn’t already a billionaire?

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[QUOTE=powerabout;135202]You export crude because you need the cash, surely?[/QUOTE]

Cash for what---- buying imported oil to replace the oil that was exported?

LNG exports make sense because we have so much of it and we need to build more distribution infrastructure. Oil exports make no sense at all because we are still importing almost half the oil we use. Nor does it make any sense to allow the export of simple refined products like gasoline and diesel, we need it all right here to keep prices reasonable. If the want to export high value petrochemicals, thats ok.

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[QUOTE=tugsailor;135222]Cash for what---- buying imported oil to replace the oil that was exported?

LNG exports make sense because we have so much of it and we need to build more distribution infrastructure. Oil exports make no sense at all because we are still importing almost half the oil we use. Nor does it make any sense to allow the export of simple refined products like gasoline and diesel, we need it all right here to keep prices reasonable. If the want to export high value petrochemicals, thats ok.[/QUOTE]
http://www.eia.gov/todayinenergy/detail.cfm?id=5290
total value of exports needs to be greater then the total imports thats when you get somewhere, what ever the make up is
Having all the oil you need so you price it cheap is a folly that causes you to waste it, then you get hooked on it and have to buy it at any cost when you need it…sound familiar?
Especially when you could have replaced those imports with all that gas that you have and kept the price of fuel down rather they be paying a price at the pump that the Arabs dictate.
http://www.pickensplan.com/oilimports/

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Let’s export the gas because we do not now have the gas distribution infrastructure to take advantage of the gas surplus

But of course when we export the gas, the price we get is better.

So then we do not need to build the domestic gas distribution infrastructure because we can simply import oil to make up for the energy we exported.

Now we trade this gas and oil on an offshore exchange at an internally exaggerated price between captive subsidiaries, generating excessive “costs” and low returns for the US based company, but great profits offshore.

See? No investment needed, but maximum cash extracted.

Everybody wins.

Well, at least everyone who counts.

That’s why.

And PS - you can bet 1000% of your money this is exactly how it will go down.

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[QUOTE=+A465B;135318]Let’s export the gas because we do not now have the gas distribution infrastructure to take advantage of the gas surplus[/QUOTE]

Well, the US maritime industry or mariners don’t win if at least 50% of those exports is not on US flagged ships. If the LNG is being sold foreign then the ships do not need to be Jones Act qualified but eventually the US fleet needs to get US coastwise LNG ships if we are truly going to go to a gas economy. There are massive quantities of methane in Alaska but it is stranded and given a decade it will become feasible to transport to the lower 48…particularly California which needs more gas. We’ve built LNG ships in the US before and can build them again. They will be world class if we can license technology from the Koreans.

.

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hurry up with those LNG terminals your old allies in Europe need the gas

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As if any of them would participate in sanctions against Russia resulting in a cutoff of 30% of Europe’s total energy requirement.

At least Reagan was against allowing Russian gas pipelines in the times they were first discussed.