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

People & Company News

Young Taken on PESA Advisory Board

Hoover Container Solutions’ chairman and CEO, Donald Young, has been nominated and elected to the Petroleum Equipment & Services Association (PESA) Advisory Board for a three-year term.

US Navy Tests Latest Aegis Weapon System

The U.S. Navy conducted a series of cooperative air defense test exercises with the Spanish navy that culminated in live missile firing events using the latest Aegis Weapon System baseline July 20-21.

Antwerp Port CEO Scoops Baron Title

After 25 years as CEO of Antwerp Port Authority, Eddy Bruyninckx has been raised to the nobility by H.M. the king of Belgium with the rank of baron. In Belgium

Tanker Trends

Libya's PFG to Lift Terminal Blockades

Petroleum Facilities Guard has blocked terminals for months. Ras Lanuf, Es Sider terminals damaged by fighting. Libya's Petroleum Facilities Guard (PFG) will

Unipec: U.S. ANS Destined for Sinopec

Arbitrage opens after ANS discount widen on ample supplies. Unipec, the trading arm of top Asian refiner Sinopec, has bought two U.S. crude cargoes, including

Asia Tankers-VLCC Rates to Hold, Ample Tonnage Weighs

"Pure" chartering market with little disruption. Rates to hold around W45 for Middle East; W48 for West Africa. Freight rates for very large crude carriers (VLCCs)

Finance

Canada Seek to contain Oil Spill

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

Ecuador Pays $112 mln Award to Chevron

Ecuador has paid $112 million to energy company Chevron Corp over a four-decade-old contract dispute, even though it remains in disagreement, the head of the central bank has said.

NASSCO Bags USS Oak Hill Modification Award

General Dynamics NASSCO-Norfolk was awarded a $42 million cost-plus-award-fee modification to a previously awarded contract for the repair and alteration for the USS Oak Hill (LSD-51).

Energy

Canada Seek to contain Oil Spill

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

Ecuador Pays $112 mln Award to Chevron

Ecuador has paid $112 million to energy company Chevron Corp over a four-decade-old contract dispute, even though it remains in disagreement, the head of the central bank has said.

Young Taken on PESA Advisory Board

Hoover Container Solutions’ chairman and CEO, Donald Young, has been nominated and elected to the Petroleum Equipment & Services Association (PESA) Advisory Board for a three-year term.

LNG

LNG: Did the Greeks Get it Wrong?

In December 2013, Alibra’s market report front page read: “When in shipping, do as the Greeks do.” At that time, Alibra was referring to the fact that 31% of the

Ship of the Year Award for NYK Vessel

Japan's first LNG-fueled ship, Sakigake, which is a tugboat owned by NYK has been recognized with a Technology Special Award at the 2015 Ship of the Year Awards

First U.S. LNG shipment to cross expanded Panama Canal

The United States will ship its first liquefied natural gas (LNG) cargo through an expanded Panama Canal next week.   The waterway shaves distances between export

News

Canada Seek to contain Oil Spill

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

Ecuador Pays $112 mln Award to Chevron

Ecuador has paid $112 million to energy company Chevron Corp over a four-decade-old contract dispute, even though it remains in disagreement, the head of the central bank has said.

ASEAN in Discord Ahead of Meeting with top China, U.S. Diplomats

Southeast Asian nations were thrown into disarray after Cambodia on Saturday blocked them from issuing a statement referring to an international court ruling against

People in the News

Canada Seek to contain Oil Spill

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

ASEAN in Discord Ahead of Meeting with top China, U.S. Diplomats

Southeast Asian nations were thrown into disarray after Cambodia on Saturday blocked them from issuing a statement referring to an international court ruling against

Young Taken on PESA Advisory Board

Hoover Container Solutions’ chairman and CEO, Donald Young, has been nominated and elected to the Petroleum Equipment & Services Association (PESA) Advisory Board for a three-year term.

Surveyors

RINA Closes Edif Group Acquisition

RINA S.p.A, the holding company of the multinational testing, inspection, certification and consulting engineering group based in Genoa, Italy, has announced that

UK Overhauls its Survey and Inspection Program

Plans to ensure there is a full maritime survey and inspection team covering the whole U.K., will see more remote working and a slight change to where some of the marine offices are based.

 
 
Maritime Contracts Navigation Offshore Oil Pipelines Port Authority Ship Electronics Ship Repair Shipbuilding / Vessel Construction Sonar 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: 0.1258 sec (8 req/sec)