Asia Buyers Wary of U.S. Condensate Test Results

Posted by Joseph Keefe
Friday, September 05, 2014

Petchem producers unlikely to buy due to impurities in oil. Big middle distillates yield, less naphtha, LPG; wide variance in API gravities in assays, samples.

Tests on samples of the same type of U.S. condensate now heading to South Korea and Japan have raised questions about the ultra-light crude's suitability for use in Asia, sources said, making some potential buyers wary about taking the oil.

The uncertainty could delay a rapid build-up in the flow of U.S. condensate to Asia after the arrival of the first exports of U.S. crude in 40 years. Asian refiners and chemical producers will have to first determine the best use for the ultra-light oil before starting to buy in large volumes.

Two Japanese petrochemical makers - Showa Denko and Asahi Kasei - told Reuters they do not plan to process the condensate due to "impurities" that would make it difficult to use as a feedstock at their plants.

Lab work has also shown that the specifications of the oil from the Eagle Ford shale in southern Texas vary more than expected, said sources who have received samples or seen assays, making it difficult for refiners to determine how to use it.

"We don't know, that's the problem. The U.S. Eagle Ford is a mixture of well heads, not just from a single wellhead," said a source with a North Asian refiner that was considering buying a cargo of the oil.

The multiple wellheads and suppliers mean there can be wide variations in the oil's API gravity from cargo to cargo, the source said. API gravity measures how heavy or light a crude is, which determines whether it can produce more heavy products such as fuel oil or more light products such as diesel and jet fuel.

In the Eagle Ford basin, nearly 300 rigs are in operation, pumping 1.5 million barrels per day (bpd) of condensate in September, up from around 200,000 bpd in 2010, according to the U.S. Energy Information Administration (EIA).

Enterprise Product Partners LP, which has sold at least six cargoes of condensate, said it had not received any negative feedback from customers about quality.

Tests done in Asia and assays received from Enterprise have shown that the bulk of the oil's output, or two-thirds of its yield when run through a refinery, will be middle distillates, and about a fifth will be naphtha and LPG, said the sources who have received samples or seen the specifications.

The oil also contains at least 10 percent residue fuel and impurities such as base metals and sediment, which cannot be processed by petrochemical plants that are not integrated with refineries, the sources said.

"It's nearer to crude than condensate," said a source at a Japanese refinery.

Condensate, a non-gas liquid produced from natural gas fields, typically has API gravity of above 55 degrees and contains a high proportion of naphtha and liquefied petroleum gas (LPG) for chemical manufacture.

The API reading in one of the assays for some of the U.S. condensate is as low as 40 degrees, said the source with the North Asian refiner.

A lower API number means the crude is heavier.

ENTERPRISE, PIONEER

South Korean refiner GS Caltex is expected to receive the first condensate export cargo on Sept. 11, shipping data on Reuters showed. Japanese refiner Cosmo Oil Co's cargo is expected to arrive in October.

GS Caltex and Cosmo both declined to comment on their tests of the U.S. condensate prior to the cargo arrivals.

The United States has softened a four-decade ban on crude oil exports, by allowing the condensate to be sold overseas without a license once it is put through a stabilizer to qualify it as a refined product.

The bulk of Enterprise's six cargoes were supplied by U.S. independent producer Pioneer Natural Resources Ltd.

"We have heard nothing negative from our customers about the quality of the product and demand for processed condensate continues," said Rick Rainey, a spokesman for Enterprise.

The condensate that Pioneer has sent to Enterprise from its Eagle Ford processing plants has "very tight specs", said David Leaverton, a spokesman for the producer.

"Pioneer isn't directly exporting our product in a single batch like that. We sell to Enterprise. We can't speak to the products exported by Enterprise," he said.

Other producers of condensate in Eagle Ford include Apache Corp, EOG Resources Inc, BHP Billiton Ltd and Marathon Oil Corp.
 

By Florence Tan and Osamu Tsukimori

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Chevron Suffers Loss, Plans Job Cuts

Chevron Corp. reported a first-quarter loss as slumping oil prices continued to drag down revenue. The company said that it is "on target" to lay off a total of 8000 workers by the end of 2016,

China COSCO to be First through the Expanded Panama Canal

China COSCO Shipping has won the draw for its container vessel Andronikos to make the ceremonial first transit through the Expanded Panama Canal during the waterway’s inauguration on Sunday, June 26.

Sellick Equipment to Open New Facility

On April, 20, 2016, at the young age of 97 years, Walter Sellick along with sons Howard Sellick - President, David Sellick - Vice President and grandson Colin Sellick - Systems Manager,

Finance

Shipping, Key Ingredient of EU’s Africa Agenda

The African economy has become one of the most promising global growth markets. Shipping is taking care of the largest part of international trade and in Africa

Ocean Economy Set to Double in Size by 2030

The world’s oceans must be managed well to ensure the potential of an “ocean economy” that was worth US $ 1.5 trillion in 2010.   "Calculations based on the

Chevron Suffers Loss, Plans Job Cuts

Chevron Corp. reported a first-quarter loss as slumping oil prices continued to drag down revenue. The company said that it is "on target" to lay off a total of 8000 workers by the end of 2016,

Energy

India's Highest non-coking coal discharge at Gangavaram Port

Gangavaram Port, the deepest and the most modern port in the country, has created yet another historical milestone record by discharging 1,56,339 metric tons of Non-Coking Coal from the vessel M.

Floating Products Storage in Focus

For much of 2015, talk of floating storage was dominated by speculation that the contango in crude futures might support crude floating storage, says Gibson Tanker Report.

Olympic Subsea Vessel Bags Contract

Olympic Shipping has secured a contract for Olympic Delta, an inspection, maintenance and repair (IMR) vessel, with an international client  to work on a renewable energy project.

LNG

Pressure Steady on LNG Shipping Rates -Drewry

LNG shipowners will have to wait until 2018 for earnings to improve, when the majority of new US plants are expected to come online, according to the latest edition

Samsung Heavy Loses $4.6-bln FLNG Order

South Korea’s shipbuilder Samsung Heavy Industries (SHI), the world’s third-largest shipbuilder,  has received a contract termination for three floating liquefied

AIDAprima Makes Maiden Call at Southampton

AIDA Cruises’ new flagship AIDAprima docked in Britain’s Southampton port for the first time on the morning of April 27, 2016, as part of a four-day short cruise.

News

Italian Ship Rescues 26 Migrants off Libya

An Italian merchant ship rescued 26 migrants off the coast of Libya in rough seas and others were feared missing, the Coast Guard said on Saturday. The Coast

Symphony Sun’ Launched in Leer

On Friday the 29th of April, Nb. 420 was launched in Leer. She was christened ‘Symphony Sun’ and is the fourth vessel in a series of 6 that will be delivered to Symphony Shipping.

ACR to Debut Pathfinder PRO SART at OTC

An important addition to any commercial vessel’s survival gear kit, the Pathfinder PRO SART is introduced by ACR Electronics, Inc. at this year’s OTC. The new search

People in the News

Italian Ship Rescues 26 Migrants off Libya

An Italian merchant ship rescued 26 migrants off the coast of Libya in rough seas and others were feared missing, the Coast Guard said on Saturday. The Coast

ACR to Debut Pathfinder PRO SART at OTC

An important addition to any commercial vessel’s survival gear kit, the Pathfinder PRO SART is introduced by ACR Electronics, Inc. at this year’s OTC. The new search

Great Lakes Inks M.E., N.C. Coastal Protection Project Deals

Great Lakes Announces $55 Million in Subcontract Work in the Middle East and Award of $38 Million for a Domestic Coastal Protection Project Great Lakes Dredge

Surveyors

Senate Markup Provides Funding for Oceanographic Vessels

Last week, the Senate Appropriations Committee marked up and approved a Commerce, Justice, Science bill that would provide $75 million to build a new Regional Survey

EV Acquires Epidote

Leading specialist in well diagnosis, EV, has announced the acquisition of Aberdeenshire-based well integrity software supplier, Epidote Limited, to enable a world-class well diagnosis service.

Canada to Build 7 New Survey Vessels

Charting Canada's waters: Canada’s government to build seven new hydrographic survey vessels   Canadian Minister of Fisheries, Oceans and the Canadian Coast Guard,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Navigation Pipelines Salvage Ship Electronics Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1542 sec (6 req/sec)