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

People & Company News

First Women's Expedition to the Arctic

Company "MyArctic-expeditions" organize the first women's expedition to the Arctic Ocean. The expedition will start on March 5 in the capital of the Nenets Autonomous

Topaz Responder Saves Refugee Migrants

Topaz Energy and Marine has emerged as an unlikely player in the effort to save refugee migrants risking their lives on the sea crossing from Turkey to Greece’s islands in order to reach Europe.

MHI's Entity to Oversee Material Handling Equipment, Engine and Turbocharger Businesses

Today Mitsubishi Heavy Industries, Ltd. (MHI) decided in principle to launch a new wholly owned entity to integrally oversee its current businesses in material

Tanker Trends

Crowley Christens 2nd LNG-ready Product Tanker

Crowley christens second of four newly built, LNG-ready product tankers for use in U.S. coastwise trade   Crowley Maritime Corp. has christened the second of

Canada Says Lifting Some Sanctions Against Iran

The Canadian government said on Friday it was lifting some sanctions against Iran, including the broad ban on financial services, imports and exports, making Canadian

Glencore to Lift Iranian Fuel Oil at Bandar Mahshahr

Anglo-Swiss commodity trader Glencore has chartered a ship to load Iranian fuel oil at the Iranian port of Bandar Mahshahr in a move that signals the return of

Finance

Sardines Boost Murmansk Port Turnover

In January 2016 turnover of the Murmansk Marine Fishing Port reached 22 thousand tons of cargo, including 15 thousand tons of fish. This is higher than last year,

COSCO Plans European Transhipment Hub

China's COSCO is forging ahead with a plan to build a European transhipment hub, reports Reuters. The state owned shipping giant is expected to make an offer for

MISC Bhd: Revenue Up

Malaysia International Shipping Corporation Berhad (MISC Berhad), a shipping arm of Petronas, has seen an increase of 12.3 percent in its net profit for the 2015

Energy

Topaz Responder Saves Refugee Migrants

Topaz Energy and Marine has emerged as an unlikely player in the effort to save refugee migrants risking their lives on the sea crossing from Turkey to Greece’s islands in order to reach Europe.

UAE Plans Floating LNG Import Terminal

State-owned Abu Dhabi National Oil Co. (ADNOC) plans to start a new liquefied natural gas floating import terminal (FSRU) in the second half of this year, three LNG industry sources said.

Glencore to Lift Iranian Fuel Oil at Bandar Mahshahr

Anglo-Swiss commodity trader Glencore has chartered a ship to load Iranian fuel oil at the Iranian port of Bandar Mahshahr in a move that signals the return of

LNG

Crowley Christens 2nd LNG-ready Product Tanker

Crowley christens second of four newly built, LNG-ready product tankers for use in U.S. coastwise trade   Crowley Maritime Corp. has christened the second of

UAE Plans Floating LNG Import Terminal

State-owned Abu Dhabi National Oil Co. (ADNOC) plans to start a new liquefied natural gas floating import terminal (FSRU) in the second half of this year, three LNG industry sources said.

Aqualis Offshore Lands Study Job for LNG Barge

Offshore marine and engineering consultancy Aqualis Offshore, part of Oslo-listed Aqualis ASA, has been contracted by Gas Entec Co. Ltd to provide an engineering

News

First Women's Expedition to the Arctic

Company "MyArctic-expeditions" organize the first women's expedition to the Arctic Ocean. The expedition will start on March 5 in the capital of the Nenets Autonomous

Topaz Responder Saves Refugee Migrants

Topaz Energy and Marine has emerged as an unlikely player in the effort to save refugee migrants risking their lives on the sea crossing from Turkey to Greece’s islands in order to reach Europe.

Sardines Boost Murmansk Port Turnover

In January 2016 turnover of the Murmansk Marine Fishing Port reached 22 thousand tons of cargo, including 15 thousand tons of fish. This is higher than last year,

People in the News

First Women's Expedition to the Arctic

Company "MyArctic-expeditions" organize the first women's expedition to the Arctic Ocean. The expedition will start on March 5 in the capital of the Nenets Autonomous

Topaz Responder Saves Refugee Migrants

Topaz Energy and Marine has emerged as an unlikely player in the effort to save refugee migrants risking their lives on the sea crossing from Turkey to Greece’s islands in order to reach Europe.

Globus Maritime Reclassifies Board Member

Globus Maritime Limited, a dry bulk shipping company, announced today that when Georgios Karageorgiou, a Class I director of Globus Maritime Limited  resigned on December 28,

Surveyors

DNV GL, RS Ink Cooperation Deal

DNV GL’s Maritime CEO Knut Ørbeck-Nilssen recently met with Konstantin Palnikov, Director General of the Russian Maritime Register of Shipping (RS), at the RS head office in St.

Drones Allow Surveys Without Scaffolds

DNV GL has completed several tests using drones to support hull surveys of vessels. Using drones to visually check the condition of remote structural components

Dual Class: RS and DNV GL Partner

In a January 28 meeting between RS Director General Konstantin Palnikov and DNV GL Maritime CEO Knut Ørbeck-Nilssen at the Head Office of Russian Maritime Register of Shipping,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Navigation Offshore Oil Pod Propulsion Port Authority Salvage Ship Simulators Winch
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: 0.1257 sec (8 req/sec)