Analysts at Wood Mackenzie said today the U.S. Commerce Department’s recent decision to allow two companies to export condensate upholds the definition of what is exportable under current law and does not represent a material change in U.S. policy. Wood Mackenzie analyst Harold York pointed out that condensate must go through a distillation process before it can be legally exported and that stabilization alone is not sufficient. The processing technologies of Enterprise Products Partners and Pioneer Natural Resources evidently employ the minimum level of distillation needed to make condensate legally exportable in the eyes of the Commerce Department.
Nevertheless, the report said, the decision could indicate that the federal government is easing restrictions on crude oil exports and that the market is testing the limits of what can and cannot be exported. Wood Mackenzie said it is advising its clients of potential incremental policy changes. Few expect that a removal of the U.S. ban on crude oil exports — which would require congressional approval — will take place before the midterm elections in November.
UPDATE: Reuters reported this afternoon that all U.S. crude — not just condensate — that goes through distillation can be legally exported, according to government and industry sources.
