By Dan Murtaugh and Sheela Tobben
(Bloomberg) — It took years to lift a ban on most U.S. oil exports. It took a week for the first shipment to be announced.
Enterprise Products Partners LP will load 600,000 barrels of domestic crude onto a tanker in the Houston Ship Channel during the first week of January. It sold the cargo to merchant trading giant Vitol Group, which will probably send it to Europe, according to two people familiar with the transaction. It’s the company’s first shipment since Obama signed a spending bill last week that repealed broad limits against exports of unrefined crude oil that had been in place since 1975.
“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,” Jim Teague, Enterprise’s chief operating officer, said in a written statement. “This action provides new markets to domestic producers, especially producers of light crude oil, and will provide global markets with supply diversification.”
The crude comes from the Eagle Ford shale region in south Texas, according to the people, who asked not to be identified because the details aren’t public. Enterprise is providing pipeline and loading services for the cargo, said Rick Rainey, Enterprise’s Houston-based spokesman. Andrea Schlaepfer, a spokeswoman for Vitol in London, didn’t immediately respond to an e-mail seeking comment.
The U.S. restricted most exports of unrefined crude as part of its response to the Arab oil embargo that caused fuel shortages in the earlier 1970s. For decades it didn’t much matter, as declining U.S. oil production and rising demand put the focus on imports.
That started changing five years ago, when companies like Continental Resources Inc. and ConocoPhillips began ramping up oil production from shale rock in Texas and North Dakota, raising U.S. output by 65 percent and creating supply gluts that forced producers to offer steep price discounts.
U.S. companies were allowed to export oil to Canada, and boosted shipments to almost 500,000 barrels a day this year, more than some members of the Organization of Petroleum Exporting Countries.
©2015 Bloomberg News
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