U.S. Crude Exports Highest Since 2000 as Canada Taps Into ShaleDan Murtaugh
Exxon Mobil Corp. and Irving Oil Corp. helped boost U.S. crude exports in February to the highest level since April 2000 as plants in eastern Canada tap into the cheaper oil that’s increased refiners’ profits south of the border for the past two years.
Shipments from the U.S. rose 70 percent from the previous month to 124,000 barrels a day, the U.S. Energy Information Administration said on its website. All of the oil went to Canada, according to EIA data. U.S. law restricts exports of crude oil without permission from the president with a few exceptions, including shipments to Canada.
The jump in exports underscores the efforts refiners on Canada’s east coast are taking to replace more expensive foreign oil with crude from the U.S., where improved use of horizontal drilling and hydraulic fracturing has boosted production and depressed prices.
“We are bursting at the seams with domestic light, sweet oil,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “Go back two or three years ago when railing started to make sense, now exporting to Canada makes sense.”
West Texas Intermediate oil futures on the New York Mercantile Exchange averaged $95.32 a barrel in February while Brent on ICE Futures Europe averaged $116.07. The Brent-WTI spread has narrowed since then, shrinking 91 cents today to $9.25 a barrel at 2:10 p.m. in New York.
Canadian refiners could import several hundreds of thousands of barrels a day from the U.S. as long as the price makes sense, said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
“That will all depend on the price of crude in the Mid-Continent,” he said. “Producers are liable to see prices come under pressure.”
Irving, which operates the 298,800-barrel-a-day Saint John refinery in New Brunswick, Canada’s largest, uses more oil from the Bakken field in North Dakota than any other single refinery, Mike Ashar, the company’s then-president, said in San Antonio on March 20. The refinery can bring in 200,000 barrels of crude a day by rail.
Imperial Oil Ltd., an Exxon unit, received about 20,000 barrels a day of crude by rail at refineries in Ontario and Alberta, the company said in its first-quarter earnings statement.
Valero Energy Corp. planned to begin processing crude this month from the Eagle Ford formation in southern Texas at its refinery in Quebec City, Quebec, Bill Day, a company spokesman, said April 4.