LOOP Will Likely Not Export U.S. Crude

Tanker Oliva offloading at LOOP.

Increased interest among some U.S. companies to export minimally processed very light domestic crude has not translated into solid plans to move oil out of the country's only port that can take deliveries from the largest tankers, Marathon Petroleum Corp Chief Executive Gary Heminger said on Thursday.

The Louisiana Offshore Oil Port (LOOP) in New Orleans, of which Marathon is a part owner, is built to take deliveries of up to 1.2 million barrels per day of imported crude, Heminger said.

Crude imports have ebbed since 2009 as booming domestic output from shale oilfields has cut them by nearly 27 percent through May this year to 7.16 million bpd, according to U.S. data.

Heminger told analysts during a quarterly earnings call that U.S. Commerce Department approvals to a pair of companies allowing exports of a very light form of crude oil that has undergone minimal processing does not mean it would make economic sense to change flows at the LOOP.

Heminger said Marathon has considered the idea, but export volumes would not be high enough to justify the cost of making the LOOP's 48-inch pipeline bilateral, or able to move crude in or out. It also would not justify building a parallel export pipeline, the CEO said.

The LOOP offloads crude 20 miles (32 km) off the coast of Louisiana, where it goes into the pipeline to come ashore.

"I do not believe that we're going to see the type of volume required to justify that kind of project, certainly not on the condensate side," Heminger told analysts.

In a subsequent interview with Reuters on Thursday, Heminger said the pipeline's size and capacity indicate the export volumes needed to justify such a project. He said discussions had not gone so far as to specify a cost, but "it definitely would start with a 'B,'" meaning at least $1 billion.

Marathon holds a majority interest in the LOOP, and the other owners are Royal Dutch Shell and Valero Energy Corp. All three would have to approve any such project, he said.

By Kristen Hays (C) Reuters 2014.