U.S. subsidiary Tidal Energy Marketing has a license to export
"limited quantities" of Canadian-origin oil from a U.S. port,
Enbridge said, confirming weeks of market rumors and speculation
about such shipments. Market sources say they expect the first
cargoes to sail for Europe later in April.
Terri Larson, an Enbridge spokeswoman, told Reuters in an email that
the firm planned to export "less than 1.5 percent of Enbridge's
total U.S. shipments." She declined to provide specifics on the port
of departure, the destination or the type and volume of oil
involved, saying this is commercially sensitive information.
The United States does not allow exports of its own oil, even though
its domestic output is at a 26-year high. There are few exceptions
to the rule; shipments can go to Canada, for example, and foreign
oil can leave U.S. shores so long as exporters have a license.
Reuters reported earlier this year that the U.S. government granted
a number of permits to re-export foreign crude.
But Enbridge is the first company to publicly confirm it holds a
re-export permit and intends to use it. The company has to segregate
the re-exports from any U.S. oil it carries in its pipelines.
The re-exports are bound to draw more attention to these
restrictions as oil companies mount pressure on the Obama
administration to end the ban, in place since the Arab oil embargo
of the 1970s.
They may also anger environmental groups that oppose growing oil
sands production in Canada, and the Keystone XL pipeline, which they
say will help tar sands oil reach a global market.
Earlier this week, Senator Lisa Murkowski, a Republican from Alaska,
urged the government to bypass current regulations by allowing
Analysts say re-exports will open up new markets for Canadian oil,
especially with the recent startup of pipelines such as Enbridge's
Seaway and TransCanada's <TRP.TO> Gulf Coast line.
"This is a viable opportunity for Canadian barrels to get out into
the wider world," said Martin King, an analyst with FirstEnergy
Capital in Calgary.
"It's another source of revenue other than big brother United
States," he added.
Oil traders have been eyeing Enbridge's rumored shipments since late
February. Many expect exports of up to 40,000 tons of heavy oil to
leave Texas ports as early as this month and go to refiners in Italy
and Spain that can process heavy crude oil.
The Department of Commerce has granted three licenses to re-export
oil to the United Kingdom, four to Italy and one to Germany since
last year, according to data Reuters obtained through Freedom of
Information Act requests.
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These are the first permits to ship oil to Europe since 2008, and
were approved by the department's Bureau of Industry and Security (BIS),
the designated gatekeeper for such licenses.
The bureau does not reveal names of companies with approved licenses
and declined to discuss specific permits for this story.
There were no approved licenses for re-exports to Spain in documents
reviewed by Reuters. So far, U.S. customs data compiled by PIERS
does not show crude oil shipments leaving U.S. ports for Europe.
Canadian oil traders say the logistics of re-exporting oil sands via
the United States were likely to be complicated. The oil has to make
its way to a U.S. port through Canada's congested pipeline network
and volumes will be constrained by total pipe and rail capacity.
Enbridge has to ensure that no U.S. oil is mixed in with the
Canadian barrels destined for re-export. In addition the condensate
used in blending to help the viscous oil sands bitumen flow through
the pipelines must also come entirely from Canada.
One Calgary-based trader said a number of companies have export
licenses similar to those Enbridge holds but will not export until
the U.S. government revisits its current stance on exports.
A NEW DEBATE ON KEYSTONE
Critics of the Keystone XL pipeline contend allowing re-exports of
Canadian oil from the United States undercuts President Barack
Obama's pledge to protect the climate.
However, Keystone's owner TransCanada Corp <TRP.TO> says it will not
re-export Canadian oil sands from the pipeline. The project, delayed
by five years, is awaiting a decision from Obama.
Enbridge says "virtually" all of the crude oil moving on its Seaway
pipeline, which ships both heavy and light crude from the Cushing,
Oklahoma, storage hub to a terminal in Freeport, Texas, is for U.S.
The company owns a 50 percent interest in the 400,000 barrel-per-day
Seaway Pipeline, one of only two major pipelines that carry Canadian
crude to Gulf Coast refiners.
(Additional reporting by Ron Bousso in London;
editing by Jonathan Leff, Nick Zieminski and Lisa Shumaker)
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