As the New Year approaches, Enterprise Products Partners isn’t wasting any time.
The Houston-based pipeline giant announced in a Dec. 23 statement it would load its first cargo of U.S. crude oil for export during the first week of January – less than a month after the ban was lifted.
“We are excited to announce our first contract to export U.S. crude oil, which to our knowledge may be the first export cargo of U.S. crude oil from the Gulf Coast in almost 40 years,” said A.J. “Jim” Teague, chief operating officer of Enterprise’s general partner, in a news statement. “Enterprise’s integrated system enabled us to quickly respond to customer demand for U.S. crude oil by international markets.”
Lifting the ban will facilitate economic growth and job creation in the United States, as well as enhance national and energy security, he said.
“This action provides new markets to domestic producers, especially producers of light crude oil, and will provide global markets with supply diversification,” Teague added.
Enterprise’s cargo of roughly 600,000 barrels of crude oil belongs to oil trader Vitol, according a Reuters report.
Producers such as ConocoPhillips and Continental Resources Inc. had long been vocal in their support for lifting the 40-year-old ban, a relic of U.S. reaction to the Arab embargo in 1973.
But not everyone wanted to see the ban lifted. Domestic refiners especially have lobbied against the change. And, some analysts say it’s too little too late. More than a week after the ban was reversed, oil prices still hover in the mid-$30s per barrel.
“It looks like the lifting of crude oil export restrictions came too late to have much impact on U.S. production or prices in an era of free falling prices,” RBN Energy LLC analyst Sandy Fielden wrote in a Dec. 27 report.
Fielden notes the United States has such a surplus – not because the refining capacity doesn’t exist – but because most of the nation’s refineries aren’t built to support the light, sweet crude that comes from shale basins. As such, the glut that occurred has weighed on the market and kept U.S. prices lower than overseas equivalent grades, he said.
“In normal circumstances, this imbalance of crude quality would have worked itself out in the international marketplace by U.S. producers selling shale crude to refineries overseas that could process lighter crudes and [the United States] continuing to import the heavier crudes [refineries] preferred,” Fielden said.