Headlines across the nation were made this fall when a ConocoPhillips tanker full of Alaska North Slope (ANS) crude was sent to South Korea. Most people are under the impression that the United States has a ban on oil exports, and in general that is true. Exceptions are made on a case-by-case basis in the Lower 48, but in 1996 a specific exemption was made for Alaska to allow exports of ANS crude.
To better understand this we must look at the supply chain. In 1996 there was an overabundance of crude in the U.S. west coast refineries. ANS production starts on Alaska’s north slope, followed by an 800-mile journey through the Trans-Alaska Pipeline System (TAPS) to Valdez. From there it is loaded into tanker ships to make its way down to the U.S. west coast. With no more than one oil refinery in Alaska, all ANS crude must leave the state on an oil tanker.
In other words, Alaska is not a final destination. All oil must leave via ship, and there is not enough storage capacity to handle any west coast interruptions. Since shutting down TAPS is never an option, a necessary change in the crude oil ban specifically for ANS crude was forced.
The U.S. Energy Information Administration shows exactly how much oil was exported, where it went, and for how long it occurred. ANS exports happened between 1996 and 2004, and the total exported amount accounts for 2.7% of all ANS production in that time period. Tapering off as the need for domestic stock increased, and at such a low percent in total, ANS exports have never been considered too much of an issue.
Further, we must look at the prices.
The U.S. west coast is now receiving an ever-increasing amount of Bakken shale oil, and California, the largest consumer of ANS crude, has seen a drastic influx of imported Canadian crude. Oil from the Bakken and from Canada are trading at lower prices than ANS, meaning that ANS crude is now equivalent to the world market price.
Most Asian countries are still rapidly developing, making them hungry for natural resources. Given Alaska’s geographic location and its stable state and federal government structure, it is no surprise that Asian markets are requesting ANS crude. Not only do Asian purchases ensure American jobs in Alaska’s north slope, but it reiterates to the world Alaska’s commitment to environmentally sound resource development.
It can be, and it has been, argued that domestic production should stay within America. Regardless, ANS crude has been a vital source of energy, jobs, and economic security for Alaska and the nation as a whole.