Pioneer Natural Resources reacts to lifting of the crude oil export ban

Europe, Asia and Latin America are potential markets for U.S. crude oil exports

The American oil industry and its supporters are applauding the passage of legislation to end the 40-year old crude oil export ban and forecasting significant benefits for consumers and businesses alike.

oil export ban
American oil production has jumped from 5 million b/d in 2000 to approximately 9 million b/d.

One of the strongest criticisms of the ban, enacted in the mid-1970s after OPEC placed an embargo on the US after it sided with Israel in the Yom Kippur War, was that forbidding exports was “fundamentally unfair” to American producers, who were not allowed to sell on international markets for higher Brent prices.

Midland, Texas-based Pioneer Natural Resources Company will be one of the beneficiaries of the budget deal between Congressional Democrats and Republicans and signed into law by President Barack Obama.

“This is a truly historic day for Pioneer and the domestic oil and gas industry,” said CEO Scott D. Sheffield. “Congress and the President have shown their commitment to free trade and have leveled the playing field for U.S. operators, allowing us to compete freely in the world market.”

oil export ban
Pioneer Natural Resources CEO Scott D. Sheffield.

“The fact that Iran and Russia can sell oil around the world, but America could not made no sense and was fundamentally unfair,” said Karen Harbert, president and CEO of the US Chamber of Commerce’s Energy Institute.

“Lifting the ban on oil exports is a much-needed step away from our nation’s 1970s energy policy. We’re hopeful that success on this issue will pave the way for common sense regulatory reforms.”

Sheffield says that while low oil prices may limit exports in the short run, long-term benefits are significant.

“As organizations such as the Brookings Institute and the Center for Global Energy Policy have stated, lifting the ban improves the country’s balance of trade, creates additional jobs and enhances America’s geopolitical position,” said Scott.

In the spring of 2014, the US Department of Commerce’s Bureau of Industry and Security confirmed Pioneer’s interpretation that the distillation process by which Pioneer’s Eagle Ford Shale condensate is stabilized was sufficient to qualify the resulting hydrocarbon stream as a processed petroleum product eligible for export without a license. Since that time, Pioneer has exported a significant portion of the Company’s Eagle Ford Shale condensate production.

“After witnessing the success of condensate exports from the Eagle Ford Shale, the logical next step was to lift the ban on crude exports. We are pleased that policy makers on both sides of the aisle engaged collectively on this issue,” said COO Timothy L. Dove.

Pioneer expects to have the ability to export crude by the middle of 2016. The company has been actively working with midstream partners to secure export facilities along the Gulf Coast. Europe, Asia and Latin America are potential markets for U.S. crude as countries from these areas would realize economic and security advantages by diversifying their sources of supply

Barry Russell, CEO of the Independent Petroleum Association of America, says the US will be a more stable source of oil for American allies in an increasingly unstable world.

“The more turmoil occurs around the world, the more our friends and allies are looking to the United States to be a stable supplier of energy,” said Russell.

“To strengthen our nation’s energy future, America must have policies in place that reflect modern energy markets, rather than policies based on a market that existed in the 1970s.”

Harbert says  Congress has made it possible to unleash American energy around the world.

“Lifting the ban will allow the world to choose a steady, reliable source of energy, and create jobs and boost communities around the nation,” she said, noting that lifting the ban was a top legislative priority for the Chamber in 2015 that included a significant coalition of businesses and local and state Chambers of Commerce to build support, and mobilizing hundreds of thousands of grassroots activists across the nation through town hall meetings, speeches, advertising and digital engagement.