By Edward McAllister
NEW YORK, Sept 25 (Reuters) - In the oil drilling andrefining heartland of Texas, the debate over U.S. crude exportsis no longer a fight over whether a 40-year ban should belifted. The question now is how soon it will end.
As Washington mulls reversing the ban amid a drilling boomthat has swamped the U.S. Gulf Coast in oil, Texan lawmakers arealready preparing for the prospect of crude oil exports from thestate's major ports, and assessing what it means forconstituents.
Even representatives of districts that include large oilrefineries, the owners of which have expressed strong oppositionto exports for fear it would increase the price of crude, toldReuters that they would support the shipment of oil overseas.
Their views represent a shift in the national discussionover crude exports in which elected officials increasinglyacknowledge the likelihood that some of the United States'abundant reserves of oil will eventually find its way overseasfor the first time since the 1970s. Already this year, the U.S.government has issued licenses to allow two companies to exportultra light crude oil known as condensate.
At stake is not just the state of the U.S. market wheregrowing volumes of oil are logjammed without an outlet.Supporters of exports also see it as a powerful political toolabroad as Europe seeks greater independence from Russian energyand violence spreads across the Middle East.
"The decades old ban on crude oil exports is no longerjustified given the current market conditions," saidRepresentative Michael McCaul, the Republican who in Aprilintroduced the Crude Oil Export Act which proposes an end to oilexport limits. "Lifting the ban will also give America a newforeign policy tool to provide greater stability in the worldoil market."
Alongside McCaul, a growing chorus of Texas representativessay that a middle ground can be met between refiners who wish tomaintain profits by limiting exports, and producers who favorunlimited markets for their crude.
Much opposition to exports remains, especially amongrefining interests who see their profits threatened. Otherswould like to see only limited volumes shipped overseas. Butsince the U.S. government began quietly issuing export permitsfor condensate earlier this year, many anticipate that fullexports will soon become a reality.
Borrowing the Bluebell Ice Cream slogan, RepublicanRepresentative Randy Weber from Texas' coastal 14th districtwhich includes Shell's Motiva refinery in Port Arthur,said: "Let's use all we can and sell the rest."
"I am a free market kind of guy. A rising tide raises allships," he said.
Even though exporting crude oil could hamper growth of theU.S. refining industry, it will promote free trade and lowergasoline prices, said Representative Blake Farenthold of Texas'27th district, home to several oil refineries. RepublicanFarenthold is co-sponsor on the Crude Oil Export Act.
"Do you vote for what is good for your district and yourconstituents or what is good for your country? I am going withthe country on this," he said.
FREE MARKET
Texas' position is unique in the oil export debate. Itssouthern coast is home to some of the world's largest oilrefineries that turn crude piped from across the continent intogasoline and other products that can be exported under currentlaw.
Inland, however, lie some of the United States' oldest andmost prolific oil fields that have been reinvigorated by newdrilling techniques including fracking. In those plays,producers favor the export of crude oil.
Oil producers want to open up their product to globalmarkets, while refiners fear that they could lose money if oilprices rise or could lose share of the refining market if oilcan be processed cheaper overseas.
Crude oil production in the United States is now at a30-year high. Refiners whose facilities are largely gearedtoward processing heavy crudes imported from Latin America andCanada are now inundated with light crude from new drillingfrontiers like North Dakota. Updating refineries to processlight crudes could take years.
Much of the debate in Texas revolves around that dilemma.
"Shell and Exxon support export, but refiners likeValero could end up paying more for the crude oil," said Gene Green, the Democrat representative from Texas' 29thcongressional district in east Houston that has a number of oilrefineries. "If you are in a producing region, things might bedifferent."
Green has called for a wait-and-see approach on exports, inpart to be sure that an oil production boom in the United Statesis here to stay.
"I want to take it one step at a time," he said. "I am notjust for throwing the door open to exports."
STORM BREWS
While the debate might be changing, opposition to exports isexpected and it could be years before the ban is fully lifted.
Refiners and consumer groups are lobbying against moreexports, hoping to keep the glut of oil at home.
In a Sept. 4 letter, the Consumers and Refiners United forDomestic Energy (CRUDE) lobbying group urged the U.S. CommerceDepartment to stop issuing licenses to export condensate. Suchlicenses, it said, are "contrary to the letter and intent of thelaw."
Moreover, lobbyist sources said that an anti-export campaigncould gather steam this autumn, led by CRUDE.
On the other side, pro-exporters including oil producerslike Conoco Phillips and Continental Resources are expected to push for an end to the ban.
All the while, lawmakers are treading carefully, especiallyahead of the U.S. midterm elections in November.
"We need to make sure it is done in a systematic way," saidRepublican Representative John Culberson from Texas' 7thdistrict, in west Houston. "We need to take care of Americans'needs first." (Reporting by Edward McAllister; additional reporting byValerie Volcovici in Washington; Editing by Marguerita Choy)
