“Cowboyistan” could produce more than enough petroleum to justify the exporting of light, sweet crude, according to Continental Resources CEO and oil mogul Harold Hamm.
Earlier this week, the U.S. Energy Information Administration’s 2015 Energy Conference was held in Washington, D.C. Hamm was one of the numerous speakers and promoters there to voice the reasoning behind exporting American-produced petroleum, according to a recent report from SNL. Promoting the operations of Cowboyistan –which includes North Dakota’s Bakken Shale and Texas’ Eagle Ford Shale and the West Texas Permian shale—Hamm claimed we are more than ready as a nation to begin exports.
“Only in America” could Cowboyistan happen, Hamm said, because of the “three Rs: rigs, rednecks and royalties.”
If it were its own country, Cowboyistan would rank seventh in the world for crude production and account for 50 percent of the world’s crude oil production growth,” Hamm stated. “Reserves? We rank right up there with the Saudis, with 250 million barrels of proved reserves.”
However, the problem, as Hamm noted, is America’s refining capacity.
“We’re a threat to OPEC,” Hamm said, arguing that there is 3.2 million barrels per day of light, sweet refining capacity overseas that is in danger of being shut down because it is unable to access crude oil. In addition, over a fourth of all refining capacity in America is foreign owned and was purchased to handle heavier crudes in order to set up new exports markets from Venezuela, Canada, Saudi Arabia and Mexico.
U.S. crude volumes will drop 700,000 barrels in 2015, Hamm told the Washington-centric crowd. Continental Resources anticipates its own drop before U.S. production picks up again. “If we lifted the ban,” Hamm said, “we add 1 percent to GDP and 400,000 jobs per year. The infrastructure is there. You just have to turn it on.”
This year has already seen bonafide oil and natural gas players come out in support of exports. In March, Railroad Commission of Texas commissioner Christi Craddick gave a testimony stating “The U.S. crude oil export ban that was put into place decades ago no longer makes sense in current times.”
Commissioner David Porter backed his fellow commissioner by explaining that not having the ability to export into the international energy market with every other country in the world “makes us subject to volatile OPEC prices.” Porter added that, “Currently, WTI crude is valued at around $50 a barrel, while Brent prices are roughly $60. That’s a 20 percent spread. With Texas producing (according to the EIA) about three million barrels per day, that’s about a billion dollar difference each month for our economy.”
ConocoPhillips Chairman and CEO Ryan Lance recently stated his fear that unless exports are allowed sooner rather than later, the pace of drilling will slow, causing domestic job losses and damaging the economy. According to a press release from ConocoPhillips earlier this year, there are currently seasonal surpluses of light oil, and these are expected to extend year-round by 2017. The resulting price discounts on domestic light oil sold to refiners, combined with weak world oil prices, threatens to force proposed development projects below their break-even points.
“Integrated refiners such as Exxon Mobil Corp. and Chevron Corp. are in favor of lifting the export ban,” Hamm said. “So it is only independent refineries without a production arm that oppose lifting the ban.”