The Commerce Department opened the door to more U.S. oil exports as long as the crude is lightly processed, tempering the impact of a law that has banned most such shipments for the past 40 years.
The department widened its definition of what has traditionally been considered a refined product eligible for shipping to customers abroad. That means more of the oil being pumped from U.S. shale formations may be eligible for export after being run through small-scale processing units.
Commerce issued its ruling after Pioneer Natural Resources Co. petitioned for approval to export a type of ultra-light oil that had been stripped of lighter gases to make it less volatile for transport, a minimal level of processing known as stabilization.
Any oil that has been processed through a distillation tower — a preliminary form of refining — no longer is defined as crude oil and therefore is eligible for export, a Commerce spokesman said in a statement.
“As far as we know, this is the first time they’re allowing condensates that have been run through a stabilizer to qualify” for exports, said Robert Dillon, a spokesman for the Senate Energy and Natural Resources Committee.
The ultra-light oil, known as condensate, has been abundant in shale formations during the drilling boom, leading to oversupplies on the Gulf Coast.
U.S. oil production and inventories are at the highest in data dating to the 1980s as new drilling techniques have released resources trapped in shale formations. Output was near 8.5 million barrels a day in the week ended June 13, the most since October 1986, according to U.S. Energy Information Administration data.