By Hal Bernton
McClatchy News Service
With a 40-year oil-export ban lifted last week by Congress, Washington terminals that receive Bakken shale crude by rail will be able to send unrefined product to Asia.
In the years ahead, that might be an attractive option. But current market conditions make the West Coast terminals an unlikely launching point for major overseas shipments, according to industry analysts.
“Three years ago, [lifting the ban] would have been a game-changer, but today there isn’t a lot of incentive to export,” said David Hackett of Stillwater Associates, a California-based transportation-fuels consulting firm.
That’s because Bakken crude producers, back in 2012, could have sold their oil on international markets at much higher prices than they could within the United States.
Today, that gap between the crude prices in the U.S. and international markets has almost disappeared.
That big change has stripped away most of the added revenue to be gained by sending the oil abroad, according to Hackett.
Tanker trains
The Bakken crude arrives at Washington terminals via tanker trains, and this cargo is a controversial addition to the state’s rail traffic.
Since the trains started traversing the state in 2012, derailments, spills and fires elsewhere have elevated concerns about the risks to Washington communities.
The oil has gone to West Coast refineries to help supplement crude as Alaska fields decline, and these rail shipments could expand in years ahead.
More than a half-dozen terminal projects have been proposed in the Northwest, including a Tesoro Corp.-backed project in Vancouver, Wash., that would be the largest such facility in the nation and is now under review by the state.
Tesoro joined the successful oil-industry lobbying campaign to lift the export ban on U.S. oil, which was opposed by Northwest environmentalists who do not want to see the region become a gateway for fossil-fuel exports to Asia.
“Lifting the crude-oil export ban is a huge giveaway to the oil industry — one that puts our health, safety, communities and economy at risk,” said Rebecca Ponzio, campaign director for Stand Up To Oil, a coalition of environmental groups opposed to the opening of new oil terminals in the Northwest.
West Coast markets
Tesoro officials have said that West Coast refineries would be the major markets for the proposed Vancouver Energy project.
A spokeswoman for Vancouver Energy said congressional removal of the ban “has not changed our business case and intended purpose for the proposed terminal.”
Oil markets have a long history of volatility, which has been underscored in recent years as U.S. crude prices dropped from more than $100 per barrel in 2014 to less than $35 per barrel last week.
In the years ahead, the markets could shift once again to favor shipping Bakken crude to Asia.
If that happened, a Vancouver terminal would be well situated to profit from exports, according to Sandy Fielden, director of energy analytics for Houston-based RBN Energy LLC.
The new flexibility to send oil to international markets would give the Vancouver terminal “more intrinsic value than if it is just feeding refineries in California,” Fielden said.
