American Oil and Gas Reporter - October 2015 - 43

of foreign-sourced crude, and certain exports from California. In addition, earlier
in 2015, EIA notes, the Department of
Commerce's Bureau of Industry and Security clarified that condensate processed
through a distillation tower was a petroleum product exportable without a license.
EIA says its oil export analysis assumes
that all oil streams with API gravity of
50 degrees and above would be eligible
for processing and export under that BIS
guidance.
Through the first five months of 2015,
it reports crude oil exports averaged
491,000 barrels a day. In addition, it estimates exports of processed condensate
during that time reached an average of
84,000 bbl/d.

Oil Exports
The discount of WTI to Brent is expected to increase to more than $10 a
barrel in study cases where the United
States maintains its crude oil export policy
and domestic production reaches or exceeds 11.7 MMbbl/d by 2025, EIA says.
Under current export policies, the
Brent/WTI spread averages $15/bbl over
2020-25 in the HOGR case, reflecting
the price discount required to spur investment in additional processing capacity
to convert incremental volumes of domestic crude into exportable petroleum
products.
In the reference case, where production
averages 10.4 MMbbl/d over those five
years, the agency says there is no need
for a wider spread to encourage more investment to add domestic processing.
The average annual Brent/WTI spread
remains close to $6/bbl in the reference
case, whether or not oil export restrictions
are removed. Unlike the HOGR case,
EIA says, projected total U.S. distillation
capacity is the same whether export restrictions are maintained or removed.
In cases where the Brent/WTI spread
grows beyond $8/bbl, EIA predicts removing export restrictions will result in
higher wellhead prices for domestic producers, whom it says will respond with
additional production. The agency says
this effect is evident in its HOGR and
HOGR/LP cases, where projected levels
of domestic production in 2025 are, respectively, 3.5 percent (470,000 bbl/d)
and 3.2 percent (380,000 bbl/d) higher
than in corresponding cases with export
restrictions.
Combined net U.S. exports of crude
oil and petroleum products generally are
higher in cases with higher domestic production levels, regardless of federal export
policies, EIA says. However, it says crude
oil export policies materially affect the
mix between crude and product exports,

particularly in the HOGR and HOGR/LP
cases, which have high levels of domestic
production.
"The result regarding combined net
exports of crude reflects a market in
which domestic consumption of petroleum
products is driven mainly by the economy,
efficiency policies, and petroleum product
prices, and does not depend significantly
on the level of U.S. crude oil production,"
the agency says.
Looking at trade patterns, EIA says
crude oil tends to occupy a larger share
of combined crude and product exports
in cases where crude exports are unre-

stricted. In situations where the level of
domestic crude production increases when
export restrictions are removed, the analysis projects total combined crude and
product exports will be higher than in
parallel cases where restrictions remain
in place.
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American Oil and Gas Reporter - October 2015

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