The ink is barely dry on legislation to lift a forty-year old ban on exporting U.S. crude oil and American energy companies are already racing to ship it overseas.
U.S. oil sales to foreign buyers have been quick to start after President Obama signed a bill that abolished the crude export ban less than a month ago.
Two tankers filled with freely-traded U.S. oil have pulled out of Texas ports in the past two weeks, with more shipments expected in weeks to come, The Wall Street Journal reported.
The first American oil sales abroad are flowing to Europe. Eventually, Latin America and Asia could become natural markets, according to industry experts at Bloomberg.
The first freely traded cargo of U.S. oil was shipped from Corpus Christi, Texas, on New Year’s Eve, 2015. ConocoPhillips pumped the oil from around Karnes County, 60 miles south of San Antonio.
From there, it will travel about 5,000 miles to Bavaria in Germany. Another cargo of U.S. oil shipped from Enterprise’s Houston terminal at the start of the year is sailing to Marseilles, France. From there, it will move by pipeline to a refinery in Switzerland, according to The New York Times.
Big energy infrastructure companies, including Plains All American Pipeline LP and Enterprise Product Partners LP, have spent the past five years pouring billions of dollars into building new pipelines, oil storage tanks and dock space at ports. These will be paid off once they race to ship abroad.
During the drilling boom, infrastructure companies reworked the country’s pipeline network so that American crude oil could move from inland shale fields in west Texas and North Dakota to the coasts where most refineries are located.
Corpus Christi has plans for the next two months to boost their oil-loading capacity in Texas by more than 40 percent to 575,000 barrels a day, Bloomberg reported.
Corpus Christi is also home to other energy companies that want to export. At its peak in August 2014, the port shipped out more than 750,000 barrels a day, mostly to U.S. or Canadian refineries, according to Housley Carr, an analyst with RBN Energy LLC in Houston.
The oil being shipped abroad after the lifting of the ban is light, sweet crude, which is pricier than the heavy crude U.S. refiners are equipped to process. This is a better fit for other refiners, according to The Wall Street Journal.
As demand rises enough to push crude prices higher, foreign buyers may come to rely on the U.S. to export as much as two million barrels of oil every day within the next five years, according to The New York Times.
Reaching that level of exports, which amounts to more than 20 percent of current U.S. oil production, would require many new pipelines and oil terminals.
As with most new markets, the flow of American oil abroad is expected to start with a trickle and then steadily rise. The current price of foreign crude is not much higher than what a barrel of U.S. oil costs, making shipping abroad appear expensive to many buyers, Bloomberg reported.
Oil pumped in producing countries from Norway to Nigeria is similar to the crude oil flowing out of Texas, but those countries are closer to Europe and Asia, making their shipments more attractive to buyers nearest to them.
However, a massive expansion of the Panama Canal, scheduled to be complete later this decade, will allow much larger ships to pass through, according to NBS News.
This expansion has the potential to open up new trade routes between the Gulf of Mexico and Asia.
Editor’s Note: Information from Bloomberg, The New York Times, NBS News and The Wall Street Journal was used in this report.