For BP The Oil Must Flow

\_/  The spice must flow indeed. For those who are not familiar with Dune, the 1965 sci-fi novel by Frank Herbert, “spice” is the one vital commodity in the universe thousands of years into the future. In the fictional world of Herbert’s Dune the flow of spice is essential; just like it is for oil today. Although the source of spice is the one and only desert planet Arrakis (aka. Dune), the source of the earthly commodity I’m talking about is this time the United States of America. The U.S. is said to become energy (oil) self-sufficient in the not too distant future as a result of advances in technology and the subsequent boom in oil exploration in the recent years. The plot twist in this story is that the U.S. has very strict policies when it comes to exporting her own oil. And right at this point companies like BP come into play… While the U.S. oil had apparently proven to be of the highest value companies like the British oil giant did not wait to interfere with America’a own energy policies. For BP the oil must flow…

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BP Splitter Refinery Seen Skirting U.S. Oil Export Ban

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The oil industry is pressuring President Barack Obama to end the 41-year-old ban on most crude exports. BP Plc (BP/) isn’t waiting for a decision.

The British oil giant has signed on to take at least 80 percent of the capacity of a new $360 million mini-refinery in Houston that will process crude just enough to escape restrictions on sales outside the country.

Amid a flood of new U.S. oil, the demand for simple, one-step plants capable of transforming raw crude into exportable products such as propane is feeding a construction boom along the Gulf Coast. If the new processing units continue to multiply, they could render moot the politically sensitive debate over whether to ease the restrictions in place since the Arab oil embargo of 1973.

“It’s a relatively inexpensive way around the export prohibition,” said Judith Dwarkin, chief energy economist for ITG Investment Research Inc. “You can lightly ruffle the hydrocarbons and they are considered processed and then they aren’t subject to the ban.”

BP and other producers will also be able to sell the lightly refined products to a variety of domestic markets.

The first of the units, built by Kinder Morgan Energy Partners LP (KMP) for use by BP, is scheduled to come online in July. Three additional plants have been proposed by other pipeline or trading companies, and refiners including Valero (VLO) Energy Corp. and Phillips 66 said they may follow suit. The plants, built for 1/10 the cost of a complex, full-scale refinery, take advantage of the law that allows products refined from oil to be sold overseas, though not the raw crude itself without rarely granted government permission.”

By Alex Nussbaum and Bradley Olson

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