President Donald Trump’s latest salvo in his trade war with China is a direct hit on a portion of the oil and gas industry that could more broadly damage his plans to boost U.S. fossil fuels.
The Commerce Department is restricting exports of ethane to China, telling companies that their cargoes pose an unacceptable risk of being diverted to a “military end use.” The department has already denied permission to export three shipments, which totaled 2.2 million barrels of the gas.
That could throw sand into the gears of the entire oil and gas production stream. Ethane and other natural gas liquids — or NGLs — come up with the crude oil and natural gas most people associate with pump jacks. That means Trump’s export controls could clog up flows all the way back to U.S. oil fields.
“Those NGLS need a home,” said George Fatula, a partner in the Washington office of the Bracewell law firm who focuses on energy matters. “It has to go somewhere, and this is making it more difficult and complicated to find that somewhere.”
