(Adds comments from hearing)
By Timothy Gardner
WASHINGTON, March 26 Ending the 40-year ban on
U.S. crude exports is the fastest way the American drilling boom
could bolster energy security in Europe and Ukraine, the CEO of
the biggest operator in North Dakota's vast oil fields told
lawmakers on Wednesday.
After Russia's invasion of the Crimean region of Ukraine,
several U.S. lawmakers have introduced bills pushing the
government to speed approvals of U.S. liquefied natural gas
exports. They say the extra U.S. supplies would provide Europe
with an alternative to supplies from Russia, from which it
currently gets nearly a third of its fuel.
"While opening LNG exports is a noble goal and one that we
as a country are actively working towards, the fact is the
infrastructure to undertake large scale overnight LNG exports
does not currently exist," Harold Hamm, the chairman and CEO of
Continental Resources Inc said at a hearing of the
House of Representatives Foreign Affairs Committee.
"If we want to have an overnight impact on today's global
events, we can immediately begin exporting crude oil, which does
not have the same infrastructure constraints (as LNG)," he
Hamm could benefit from an easing of the export ban, by
selling more of the crude from the Bakken North Dakota
oilfields, where Continental is the biggest lease holder.
Representative Ed Royce, the chairman of the committee, said
the United States "should end its self-imposed sanctions on
energy exports." Lifting the oil export ban and approving LNG
exports would "would advance our geopolitical interests,
including by undermining the coercive leverage of Russia and
others," he said.
The LNG export option faces several hurdles. The U.S. can
already export LNG to nations with which Washington has free
trade agreements, such as Canada. But the first U.S. project to
export LNG to other countries would not launch until late next
year. Other projects would take years, as billions of dollars of
equipment to super cool gas for export needs to be built.
In addition, Ukraine lacks a port that can import LNG, and
in any event Turkey currently does not allow LNG tankers to sail
through the Bosphorus straits to the Black Sea.
A DROP IN THE SEA
The idea that U.S. crude oil exports could make a big
difference in Europe is not shared by everyone.
Michael Levi, a fellow at the Council on Foreign Relations
who testified at the hearing, said the ability of U.S. exports
to weaken Russian President Vladimir Putin's hand is less
powerful than many think.
"Oil exports are a fairly weak tool against Russia," he
said. "Europe can already buy oil from elsewhere if Russian
supplies are cut off."
And U.S. exports would be "a drop in an already large sea"
of the global oil market, Levi wrote in a recent blog.
The United States, Russia and Saudi Arabia are the world's
top oil producers.
While pressure is building on the administration of
President Barack Obama to lift the ban that resulted from the
oil price shocks of the 1970s, few analysts think an outright
reversal will come anytime soon.
The United States still imports much of its oil, so it could
be a few years before it has so much that most companies will
need to find new markets. In addition, no major legislation to
lift a ban currently exists, in part because few lawmakers in an
election year want to support a measure that could be blamed for
having the potential to raise domestic gasoline prices.
Still, President Obama could create a new category of export
licenses as a matter of national interest, as has been done for
segments of the market in the past. President Ronald Reagan did
so with U.S. crude exports to Canada, while Bill Clinton allowed
exports of Alaskan crude.
The administration could also allow export licenses on a
case-by-case basis of batches, if it is in the national interest
and if a company is able to prove the oil could not be marketed
in the United States.
Worries about higher fuel prices resulting from a reversal
of the ban could be overdone, according to one analyst.
Elizabeth Rosenberg, director of the energy, environment and
security program at the Center for a New American Security, told
the lawmakers that lifting the ban could raise some crude
prices in line with global benchmarks.
But a broad hike in fuel prices at gasoline stations would
be unlikely, and most U.S. motor fuel prices could even drop
several cents per gallon, she told lawmakers, citing experts at
Resources for the Future think tank.
If the ban is not overturned, it could push U.S. crude
producers to eventually slow output, which could undermine
global energy security. "Without the crude export relief valve,
oil companies will pull back on what will be increasingly
uneconomic production," she said.
(Reporting by Timothy Gardner, Editing by Ros Krasny and