The U.S. Department of Commerce has put on hold at least two companies’ appeal for authorization to trade on ultralight type of crude abroad, sufficiently stonewalling an industry push to export a maddening surplus of oil in the midst of the U.S. shale revolution, sources reveal.
Over a month ago in June, the Department of Commerce deliberated that two Texas companies, Pioneer Natural Resources and Enterprise Products Partners, could commence exporting of lightly processed crude called condensate. The news broke out creating havoc, since it amounts to being the biggest slackening of the U.S. ban on oil exports since the ruling was passed in 1975. Department of Commerce authorities remarked that permitting condensate exports did not designate a change in law.
‘…Indefinite Pause in Export Review Procedure’
Those organizations looking for a clearer explanation on trading ultra-light oil, have been told that their appeals are continuously "held without action," an individual acquainted with the matter revealed a week ago, outlining an indefinite pause in the review procedure that permits authorities to look for extra information to reach to a decision.
This may likewise gives the authorities more of a chance to accumulate some type of in-depth public guidance about what sort of oil can or can't be exported, noting industry's ballooning outcry for clarification. Sources reveal, it may take up to several weeks for such a document to be finalized.
It is vague when the Commerce Department's Bureau of Industry and Security (BIS) first started setting a "hold" on such applications, what number of have been influenced or to what extent it may keep going.
Sources said the BIS may be more careful as it answers such demands after a month ago's disclosure that Pioneer Natural Resources Ltd and Enterprise Product Partners LP had been told in March that putting condensate through an advanced stabilizer was sufficient for exporting it without a permit.
The news resulted into disarray and inquiries from Washington to Houston, significantly after BIS authorities said the decision was just a technical translation, not an official effort by the Obama organization to straightforwardness a decades-old fare arrangement.
U.S. crude oil exports have been basically banned by law since 1970s when the Arab oil prohibition, unless they are sold to Canada or have some way or another in its processing; however weight to discover routes around the regulations escalated in 2014.
Apache Corp, EOG Resources Inc, BHP Billiton Ltd and Marathon Oil Corp are some of the major producers of condensate in Eagle Ford.
‘…BIS has been considering a FAQs on Exports’
About a month ago, when the disclosure by Pioneer and Enterprise occurred, experts were confident that running condensate through a stabilizer was the same as it running through a distillation tower, as expressed in the official BIS regulations.
The Commerce Department is additionally fighting criticism from lawmakers. Not long ago, Democratic Senators Robert Menendez and Edward Markey wrote to Commerce Secretary Penny Pritzker, demanding to know whether BIS the legal authority to let organizations trade condensate.
"If the Commerce Department is suggesting that U.S. law should be eroded, then they need to give a full explanation of why they need to do that and we expect them to answer the questions that Senator Markey and Senator Menendez asked," Eben Burnham-Snyder, a spokesman for Markey, told Reuters. "What we want instead of frequently asked questions is answers."
The organization missed a due date last Monday to respond to the representatives however the legislators expect a response soon, Burnham-Snyder said.
The BIS has been considering a ostensible Frequently Asked Questions on exports for past several months, as companies have approached its authorities with more inquiries about what are the legal obligations to sell crude overseas.
"There is political pressure surrounding this and I think any slowdown would be related to making sure BIS is providing consistent advice," said Christian Davis, a lawyer specializing in export controls at Akin Gump Strauss Hauer & Feld LLP, whose clients includes energy companies with export applications.
In the interim, interest for U.s. condensate is developing. Only one week after BIS affirmed its endorsement to ship delicately handled oil abroad, Enterprise sold its first freight to a Japanese exchanging house and was looking for more purchasers in Latin America, as indicated by exchanging sources.
Jacob Dweck, a partner at law firm Sutherland Absill & Brennan, who represented Enterprise regarding its ruling, says that various organizations, are interested in the same as Pioneer’s and Enterprise’s.
“Some of our clients already have filed their ruling requests, while others plan to file very shortly,” he said, adding that he anticipates 10-15 "look-alike ruling requests" to the Pioneer and Enterprise rulings.
"These types of look-alike requests are not intended to expand the scope of the rulings, but in effect to discover and ensure that the permissible scope is known to the applicant.”