26 March 2014, News Wires – Ending the 40-year ban on US crude exports is the fastest way the American drilling boom could bolster energy security in Europe and Ukraine, the chief executive of the biggest operator in North Dakota’s vast oilfields told lawmakers on Wednesday.
After Russia’s invasion of the Crimean region of Ukraine, several US lawmakers have introduced bills pushing the government to speed approvals of US liquefied natural gas exports.
They say the extra US supplies would provide Europe with an alternative to supplies from Russia, from which it currently gets nearly a third of its fuel.
“While opening LNG exports is a noble goal and one that we as a country are actively working towards, the fact is the infrastructure to undertake large scale overnight LNG exports does not currently exist,” Harold Hamm, chief executive of Continental Resources, told the US House of Representatives Foreign Affairs Committee, according to a Reuters report.
“If we want to have an overnight impact on today’s global events, we can immediately begin exporting crude oil, which does not have the same infrastructure constraints (as LNG),” the news wire quoted him as saying.
Hamm could benefit from an easing of the export ban, by selling more of the crude from the Bakken North Dakota oilfields, where Continental is the biggest lease holder.
Representative Ed Royce, the chairman of the committee, said the US “should end its self-imposed sanctions on energy exports.”
Lifting the oil export ban and approving LNG exports would “would advance our geopolitical interests, including by undermining the coercive leverage of Russia and others,” he said.
Some observers say that 2014 will be the year the crude-oil ban, largely crafted in the aftermath of the Opec oil embargo of the 1970s, may get a second look.
The American Petroleum Institute lobby group and other industry voices have come out in favour of relaxing the ban, while at least one union has stated its opposition on concerns that refinery jobs could be hurt.
Permitting more crude oil exports would help address the mismatch between soaring output of light, sweet crude from the nation’s shale formations and US Gulf coast refineries, better suited to process heavier crudes, oil producers argue.
The LNG export option faces several hurdles. The US can already export LNG to nations with which Washington has free trade agreements, such as Canada. But the first US project to export LNG to other countries would not launch until late next year.
Other projects are still several years away from first-LNG.
The idea that US crude oil exports could make a big difference in Europe is not shared by everyone.
Michael Levi, a fellow at the Council on Foreign Relations who testified at the hearing, said the ability of US exports to weaken Russian President Vladimir Putin’s hand is less powerful than many think.
“Oil exports are a fairly weak tool against Russia,” he said. “Europe can already buy oil from elsewhere if Russian supplies are cut off.”
And US exports would be “a drop in an already large sea” of the global oil market, Levi wrote in a recent blog post.
While pressure is building on the administration of President Barack Obama to lift the ban that resulted from the oil price shocks of the 1970s, few analysts think an outright reversal will come anytime soon.