The U.S. government has granted permission to BP (NYSE: BP) to ship domestic crude to Canada, and amid ever-increasing production within the country, Royal Dutch Shell (NYSE: RDS.A) has also applied for an export license.
Presently, domestic production is at its highest since 1995. The U.S. continues to import more than 8 million barrels of oil daily, but production from the Bakken and Eagle Ford shales has certainly had a noticeable impact.
BP will export crude to certain Canadian refineries, though it has not begun such exports yet. Shell has not disclosed target destinations or other information.
Thus far, export plans seem limited to sending the light, sweet Bakken crude to several Canadian refineries on the East Coast. Normally, these refineries depend on European imports, which are much more expensive. In exchange, these refineries send their finished product over to the U.S.
Recently, pipeline bottlenecks have caused U.S. Midwest prices to fall more than $20 below Brent crude, which was trading over $115 per barrel last week Thursday.
The industry is observing matters as companies are trying harder to ship overseas from the Gulf Coast rather than just to Canada; this would enable them to export American crude as far as Argentina.
U.S. exporting of crude has become a hot topic in a Presidential election year, and both candidates have emphasized that they will make domestic oil production and energy a priority.
Domestic exports to Canada have been increasing to roughly double what they used to be 5 years ago. That stands to increase when Enbridge (NYSE: ENB) completes its Eastern Access project, which is intended to expand its capacity to handle the increasing production out of North Dakota, as well as reverse an existing pipeline to deliver Western crude all the way to Montreal.