Posted on 01/14/2015 5:48:13 AM PST by DeaconBenjamin
Shell had been working with the U.S. Department of Commerce’s Bureau of Industry and 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.
The approval enables Shell to move ahead with exports of condensate that qualifies as an exportable refined product as defined by BIS guidance issued on Dec. 30, the company said.
However, U.S. crude oil 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.
Condensate makes up an increasing portion of growing U.S. output, which reached a 25-year high of more than 9 million barrels per day last month.
Yet U.S. 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 stabilizer, which removes natural gas liquids, but does not make motor fuels.
Stabilizers 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, sought more clarity from the BIS. At least one prominent Eagle Ford producer, BHP Billiton Ltd, moved forward with exports without waiting for a ruling, confident that its output would undergo sufficient processing to qualify.
The BIS issued guidance on Dec. 30, 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.
So, the department of commerce has never bothered to look up the word “fungible” in the last 30 years?
CC
Shell paid Obama’s requested Jizya.
Stabalizers are NOT distillation towers.
What the government has clarified is oil and condensate, processed through a distillation tower, that is heated to vapor and separated into different products, is exportable without special licensing, just like it has been for years.
They have specifically stated that Stabalizing is NOT sufficient processing and cannot be exported without special licensing.
There has been no change in the rules, just added description to answer some of the frequently asked questions.
FAQs – Crude Oil and Petroleum Products December 30, 2014
http://www.bis.doc.gov/index.php/policy-guidance/faqs#navigation
4. What is required in order for liquid hydrocarbons to have been “processed through a crude oil distillation tower”?
Under Section 754.2(a) of the EAR, liquid hydrocarbons that have not been processed through a crude oil distillation tower are classified as crude oil. Liquid hydrocarbons processed through a crude oil distillation tower are classified as petroleum products (EAR99). 15 CFR 754.2(a).
Distillation is the process of separating a mixture of components according to their differences in boiling points. In order for liquid hydrocarbons to be classified as petroleum products, there must be material processing through a crude oil distillation tower. If there is no processing in the distillation tower, or the processing is de minimis, the liquid hydrocarbons will not qualify as petroleum products.
Processes that utilize pressure reduction alone to separate vapors from liquid or pressure changes at a uniform temperature, such as flash drums with heater treaters or separators, do not constitute processing through a crude oil distillation tower. Crude oil processed through such equipment remains classified as crude oil.
The factors BIS will consider in reviewing commodity classifications to determine whether the product has been “processed through a crude oil distillation tower” include, among others:
(1) Whether the distillation process materially transforms the crude oil, by using heat to induce evaporation and condensation, into liquid streams that are chemically distinct from the crude oil input;
(2) The change in API gravity between the input of the process and the output of the process;
(3) The change in percentage of different types of hydrocarbons between the input and output of the process;
(4) Whether the streams resulting from distillation have purposes other than allowing the product to be classified as exportable petroleum products, such as use as petrochemical feedstock, diluent, and gasoline blendstock;
(5) Whether the distillation process utilizes temperature gradients and has significant internal structures, such as trays or packing, and differentiated output streams;
(6) Whether the distillation uses towers with more mechanical complexity and heat, higher residence time, internal structures that promote condensation and better separation, and a consistent quality liquid streams (also called cuts or fractions) than equipment used to separate vapors and liquids for transportation needs.
These factors are not intended to be categorical or exhaustive. In reviewing commodity classification applications, BIS will look at the particular circumstances of each application to determine whether the output of a process can be considered a petroleum product under the current regulatory definition.
would it be accurate to say, this stuff is exportable, because it is not crude?
is that an accurate lay person way of saying it?
You figure this is to send condensate to Alberta to thin the bitumen for pipelining it out?
Keep in mind, no rule change was made.
But the condensate production is growing beyond the domestic markets ability to economically use it (too light for most transportation fuel).
There has been growing request to export it and this was probably done to lower the inquiries for clarification.
Most of the increase in production is Gulf Coast, not a simple location for Alberta export.
No. It is treated exactly like crude oil.
In the raw form, it is not exportable due to the ban, just like crude oil.
If processed through a distillation tower (main incoming unit at a refinery) it is exportable as a “refined” product, just like crude oil.
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