A Review of the Nigerian Energy Industry

Shell gets US condensate export nod

14 January 2015, News Wires – Anglo-Dutch supermajor Shall says it has received US approval to export a very light form of crude that has undergone minimal processing, according to reports.

Shell had been working with the US Department of Commerce’s Bureau of Industry & Security (BIS) on how to ship lightly processed condensate overseas without violating a decades-old crude export ban, the company told Reuters. The BIS regulates export controls.

Shell facilityThe approval enables Shell to move ahead with exports of condensate that qualifies as an exportable refined product as defined by BIS guidance issued on 30 December, the company said.

However, US crude prices have fallen by more than half since June, to less than $50 a barrel, and Shell said it would export processed condensate when it was sufficiently profitable.

“The timing of any potential future export of this product will be determined by the economics of the transaction,” Shell said.

Previous approvals were given to Enterprise Products Partners, Pioneer Natural Resources and Peaker Energy.

Condensate makes up an increasing portion of growing US output, which reached a 25-year high of more than 9 million barrels per day last month.

Yet US refiners and petrochemical companies have a limited appetite for the super-light crude and, until last year, the oil industry believed it needed sophisticated processing, such as provided by a refinery, before it could be exported.

A few companies received private approvals in 2013 and last year that allowed exports as long as the condensate had been run through a distillation tower such as a stabiliser, which removes natural gas liquids, but does not make motor fuels.

Stabilisers are common in the Eagle Ford shale in Texas to ensure that crude and condensate are safe to transport in pipelines.

About two dozen companies, including Shell, have sought more clarity from the BIS.

At least one prominent Eagle Ford producer, BHP Billiton , moved forward with exports without waiting for a ruling, confident that its output would undergo sufficient processing to qualify.

The BIS issued guidance on 30 December – which the agency had been working on for most of 2014 – to provide more clarity to companies awaiting rulings.

The agency also started telling some companies that they should follow BHP’s lead, according to Reuters.

– Upstream

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