Alaska oil, exported for first time in a decade, heads to South Korea


A tanker carrying oil from Alaska’s North Slope is heading to South Korea, the first such export in a decade, officials confirmed on Tuesday.

The oil shipment, though considered relatively small, is significant because it focuses attention on the complicated issue of the 40-year-old U.S. ban on exporting crude oil that has been in effect for the Lower 48 states. Alaska was exempt from the ban in 1996.

The tanker Polar Discovery owned by ConocoPhillips left Valdez in Alaska on Sept. 26 and is expected to arrive Oct. 10 at Yeosu, South Korea, according to the energy intelligence firm Genscape. The tanker can carry up to 784,000 barrels of crude.


ConocoPhillips would not directly confirm that it has shipped the oil, but in a statement, said it had entered into a sales agreement to export a shipment of Alaska crude oil for delivery to Asia in this year’s fourth quarter.

The company defended the move, saying it was legal under federal law and was done to take advantage of higher prices in Asia when compared to its usual West Coast markets. The company said the terms of the deal were confidential.

“We are entering into this transaction because during the trading period for this volume, bids from Asian customers were higher than bids from USWC customers,” the company stated. “At that point in time we calculated we could achieve a higher realized price for the crude oil after all incremental costs were taken into account. ... This will enable the state of Alaska and ConocoPhillips to potentially realize a higher value for this important natural resource.”

The company also said it would continue to focus on “our traditional, and most important, market” for Alaska crude -- the U.S. West Coast.

According to the U.S. Energy Information Administration, about 2.7% of Alaska oil production was exported to foreign countries from 1996 to 2004, when the practice stopped. South Korea was the largest customer at 46.15 million barrels and the rest – 49.34 million barrels -- went to Japan, China and Taiwan. As of April 2014, no Alaskan oil had been exported since 2004.

The United States in the 1970s made it illegal to export domestically produced crude oil without a license as a way to conserve domestic oil reserves and discourage foreign imports at a time when the Arab oil embargo showed how vulnerable the United States was. In 1996, President Bill Clinton amended the policy to allow exports of crude from the North Slope in Alaska that traveled on the Trans-Alaska Pipeline System to Valdez.


In recent years, however, oil production in the United States has boomed as new techniques including hydraulic fracturing have allowed oil producers to reach new sources of oil. In July, U.S. oil production averaged 8.5 million barrels a day for the second straight month, the highest level since 1986.

That growth in production has put pressure on lawmakers to reconsider the ban on exports. Republicans led by some in Texas and other energy producing areas have pushed for new legislation.

Sen. Lisa Murkowski, of Alaska. the top Republican on the Senate Energy and Natural Resources Committee, welcomed the news of the latest shipment from the North Slope to Asia.

“I am encouraged to see Alaska increasing its participation in global oil markets,” she said in a statement released this week. “It’s my hope that Lower 48 oil will soon follow suit.”

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