The U.S. might consider exporting light, sweet crude to Mexico in a swap for heavy crude, Adam Sieminski, administrator of the U.S. Energy Information Administration, said today at a conference in Houston.
Mexico produces mostly heavy crude while its refineries are set up to run light, sweet oil, Sieminski said. Many U.S. Gulf Coast refiners are configured to run heavy crude while the U.S. is boosting production of light, sweet oil.
“Some things the executive branch can do, other things would require legislative action,” Sieminski said in an later interview. “The president has some flexibility, the Commerce Department has some flexibility. But it’s a sensitive issue, and Congress is obviously going to have an opinion.”
Light, sweet crude from the Gulf Coast is already being exported to Canada, Sieminski said at the Platts North American Crude Marketing Conference.
Swapping grades with Mexico “certainly makes sense, given the amount of light sweet crude oil being produced in the United States,” Stephen Schork, the president of Schork Group Inc. in Villanova, Pennsylvania, said by phone. “We have too much of it. We need more of the heavier, sour Mexican crudes to blend to get to that optimal medium-sour blend U.S. Gulf Coast refiners are geared for.”
Federal law requires companies to obtain licenses from the Commerce Department to export crude oil. The department’s policy is “to approve applications for exports of crude oil to Canada for consumption or use therein,” according to Commerce’s Export Administration Regulations.
Limited amounts of crude oil have been exported to Mexico and Costa Rica, according to the EIA’s website.
In 1996, 267,000 barrels of crude were sent to Mexico in August and September, EIA data show. Crude was exported as late as May 2012, when 5,000 barrels went to Mexico. The total shipped to Mexico is 384,000 barrels.
Currently, most of the crude exported goes from the Midwest to Canada, according to the EIA’s website. Other exports to Canada have been from New York, and before 2007, export licenses were granted to send Alaskan North Slope crude to countries in Asia including South Korea.