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By Timothy Gardner and Kristen Hays
June 27 All U.S. crude that is processed by a
distillation tower, not only light oil known as condensate, is
exempt from the 40-year crude export ban, U.S. government and
industry sources said on Friday.
The Department of Commerce determined this week that two
companies that produce condensate, a light oil, can export the
petroleum if it is processed by a distillation tower.
The sources said any crude that goes through the process can
also be exported, potentially widening the amount of petroleum
U.S. producers can send to markets abroad.
The Department of Commerce told Irving, Texas-based Pioneer
Natural Resources and Houston-based Enterprise Product
Partners this week that they can export crude that has
been lightly processed after they asked the department for
Some oil field equipment called stabilizers can be adjusted
to qualify as more complicated distillation towers, which could
further widen what kind of petroleum can be shipped, said one of
In a ruling earlier this year, the Department of Commerce
told Pioneer and Enterprise that processing their oil through a
condensate stabilizer - a much cheaper, easier form of
processing that simply separates light petroleum gases from
crude oil - would also qualify it for export.
By focusing on how the oil is treated, rather than what it
is, the Department of Commerce ruling appears to open an option
for companies that produce traditional crude to get around the
crude ban by lightly boiling their own oil.
A distillation tower is a type of refining equipment
typically used to heat crude oil to the point that it separates
into refined fuels like gasoline and naphtha.
The new interpretation of the ruling, which has not been
previously reported, will add to the intense speculation over
how much of the U.S. shale oil boom might reach overseas
Many things about the regulations remain unclear, however.
For instance, it is unclear how the Commerce Department would
define a distillation tower.
Thus far, most focus has been on surging Texas production of
what is known as condensate, a type of oil that is so light it
often remains in gas form until it is pumped out of the ground.
But a broader interpretation of the distillation process might
allow other producers to export crude that has been minimally
(Reporting by Timothy Gardner and Kristen Hays in Houston)