By PRAMOD KULKARNI
Editor in Chief
ORLANDO -- The AFPM annual meeting is an ideal venue to learn
about new refining
old college mates and former colleagues, and strike up
conversations with fellow delegates on issues of the day.
This year, a frequent topic of conversation during the AFPM
opening reception on Sunday evening was the prickly issue of
US crude oil exports. The question of whether the US
government should lift the 39-year-old ban on crude oil
exports has created an economic tug-of-war between the
upstream and downstream sectors of the oil and gas industry.
The issue has also caused a division between the downstream
independents, who depend totally on refining
operations, and the
vertically integrated operators, who have both upstream and
The upstream crude oil producers would like the export ban
lifted in the hopes of a free, global market for their light
shale crude. The opposition comes from some US refiners, who
want to preserve the status quo, and be able to continue to
obtain shale crude, at a discount of as much as $12/bbl, and
export refined products at a significant economic advantage
over refiners in other parts of the world. At this time,
there are no restrictions on the export of refined products.
The shale producers have embarked on a lobbying effort, led
by the American Petroleum Institute (API), and Alaska Senator
Lisa Murkowsky (Rep.) to lift the export ban. In early March,
a few of the refiners teamed up to launch the first major
lobbying campaign to retain exclusive access to US-produced
light shale crudes. The campaign is titled CRUDE (Consumers
and Refiners United for Domestic Energy).
At this time, CRUDE members are small independents: Alon USA
Energy, PBF Energy, Monroe Energy, and Philadelphia Energy
Services. CRUDE has hired the lobbying firm of Peck, Madigan
& Jones to represent its interests in Washington D.C.
While Valero Energy is absent from CRUDE coalition, its
spokesman Bill Day told The Houston Chronicle that the
current system is working well and should stay in
AFPM annual meeting delegates expressed a wide range of
opinions during the opening reception on Sunday evening.
We believe in free trade, so were for crude oil
exports, said Gary G. Yesavage, President of Chevron
Manufacturing. It is the independents that would be
affected. Of course, in a diverse organization as AFPM, you
can have a diversity of opinions on this subject.
Some of the shale operators are already getting around
the export restrictions by minimal refining
through teapot refineries
and splitters, suggested Tariq Malik, General Manager
(Refining) for CITGO Petroleum in Corpus Christi,
I think most North American refiners would be against
lifting the ban, said Chris Gamble, process engineer
with Irving Oil in New Brunswick, Quebec in Canada.
Right now, low feedstock
prices are helping us
compete with the Asian refiners.
An executive with Tesoro Corporation concurred by saying low
prices are necessary for
American manufacturers to remain competitive. We need
to protect the US manufacturing sector, he insisted.
AFPM President Charles Drevna expressed a more nuanced
opinion. Free trade would apply to crude oil exports,
but there are tangential issues that need to be addressed in
the creation of a comprehensive energy policy
. These issues include
opening up Federal lands for exploration and elimination of
the Jones act (which requires all goods transported by water
between U.S. ports be carried on US-flag ships).