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Condensate...condensed.

General discussions of the systemic, societal and civilisational effects of depletion.

Re: US Condensate Exports Begin

Unread postby hvacman » Fri 27 Jun 2014, 16:41:42

"Stabilizing a liquid hydrocarbon stream is not sufficient; it must also be distilled prior to exporting,"

"But Mr. ATF agent - I ain't making no distilled product for export- It's just a corn juice 'stabilizer' for domestic consumption"
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Re: US Condensate Exports Begin

Unread postby toolpush » Fri 27 Jun 2014, 18:03:12

Please correct me if I am mistaken, but oil exports to Canada would be allowed due to NAFTA? These international agreements have a way of over riding domestic laws in my experience. So the oil export ban and exports to Canada are not in conflict.

On another point, Canadian Tar sand production hasn't been able to be exported from US ports, as it contained US condensate. Some has been railed to the gulf coast certified that it contained only Canadian condensate. So if US condensate can now be freely exported then there may be a lift in Canadian tar sand production being exported from the gulf coast as well.

It will be interesting to see how things pan out.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Fri 27 Jun 2014, 18:37:15

Pusher - Not 100% sure but this is how the logic would probably work. First, an amount of condensate exported to Canada has been done via exemptions to the ban issued by the federal gov't. The great majority of the exemptions have been granted for exports to Canada. If that oil is shipped south as diluent it has already been issued an exemption so exporting it is allowed. And then consider "upgraded" condensate that has been converted into product and thus is exempt from the ban. You may be aware of the plans to build a pipeline from La to Alberta that will no doubt carry a diluent PRODUCT made by upgrading US condensate.

So in essence none of the Canadian oil sands production will arrive in the Gulf Coast mixed with US oil that cannot be exported. It will arrive mixed with US oil that has already been exempted from the ban or it will arrive mixed with a refined product (which is legal to export) that has been "made" from US oil. And there's also one other possibility. Condensate recovery facilities are being constructed in Alberta to remove the condensate which allows the prediction to be pipelined from the fields to Hardisty where the pure oil sands production is loaded into heated rail cars. I haven't heard of specific plans to do the same recovery on the Gulf Coast. But given the weak market for condensate in the region why do it? Better to sell the oil sands production that has been combined with the more valuable exportable "product" made from US oil.

See...you thought you needed to be an engineer to know how to export US production. You really just needed to be a lawyer. LOL.
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Re: US Condensate Exports Begin

Unread postby Synapsid » Fri 27 Jun 2014, 23:03:18

toolpush, ROCKMAN,

The Duvernay is another source of condensate that is expected to be used to dilute oil-sands bitumen, and it's in NW Alberta or thereabouts I think. That would be a Canadian diluent, so there would be no obstacle to exporting it from the Gulf Coast.
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Re: US Condensate Exports Begin

Unread postby Pops » Sat 28 Jun 2014, 09:06:39

ROCK wrote:nothing has really changed with respect to the oil export "ban"


Exporting NG plant liquids has always been legal, exporting field condensate has been illegal since the '70s. So it isn't surprising to see some exports.

The point is, much of the increase in US "crude oil" production has actually been field condensate and it is exporting this production that is the point.

Here is the thing,
US lease condensate production is booming. Figure #1 below shows our estimate of current production (now above 1.2 MMb/d) and where it is being produced. You can see that the engines of condensate growth are the Eagle Ford and Permian basins in Texas and the Anadarko primarily in Oklahoma in areas like Granite Wash and SCOOP (South Central Oklahoma Oil Province). But the big driver is Eagle Ford where we believe that up to 45 percent of crude production is more correctly categorized as condensate. We expect lease condensate production to increase to 1.6 MMb/d by the end of 2018.These numbers are only estimates because the EIA do not separate out crude and condensate production statistics in current production numbers and they may be even higher than we suggest because surging tight oil production from horizontal drilling in the Permian Basin is likely producing increasing volumes of condensate (see Stacked Deck).

Image




I'm no chemist but here is the EIA definition of "condensate":
Condensate (lease condensate): Light liquid hydrocarbons recovered from lease separators or field facilities at associated and non-associated natural gas wells. Mostly pentanes and heavier hydrocarbons. Normally enters the crude oil stream after production.


THat is NGPL I think, on this page the EIA says pentane exports look like so.

Image


Exports of Pentane alone (again, NGPL) have gone from 25kbd to 200kbd since jan. 2011 (Iran sanctions I'd guess) and further considering that the stories I've read talk about 400-500kbd of new splitter construction underway currently to boil off whatever needs to be boiled off so the rest can be exported. I'd think allowing export of 700Mbd of what formerly went into the "crude oil stream" think you'd have to conclude that this is exporting crude.


The upshot is, if field condensate is allowed to be exported, it obviously will no longer "enter the crude oil stream." I think you'd have to at least say that exporting condensate then is exporting "the product formerly known as crude."
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Re: US Condensate Exports Begin

Unread postby Pops » Sat 28 Jun 2014, 09:11:47

Here is another picture showing total NGPL exports (LPG & Pentane+)

Image
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Sat 28 Jun 2014, 09:31:08

Pops - I think you understand this so for the benefit of others: condensate is not a NGL. It is oil. A real example: my well in Cameron Parish, La, produces condensate and NG. I run the NG thru a JT plant at the well head that separates the NGL from the NG stream. It get dumps into a bullet tank and is hauled off by truck every few weeks. Like why the oil (condensate) is hauled by truck to refineries in Lake Charles where I sell it benchmarked to La Light Sweet.

The term "condensate" refers to the production phase. Condensate is oil. There are many condensates (typically 40 API or lighter) that garner a higher price then heavier oils. My Cameron Ph. condensate has a relatively high gasoline yield so at certain times during the year I get paid a slight premium over what they pay for some "oil".

So folks can stopping pissing on the "condensates". LOL. Many or more valuable/desirable than some crude oil. Wants to "dis" something go after 15 API with high sulfur. That stuff is truly crap but guess what: a bbl of it is counted just the same as a bbl of LLS...it's a bbl of oil.
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Re: US Condensate Exports Begin

Unread postby Graeme » Sun 29 Jun 2014, 18:25:30

More on this story in the following:

US gets ready to ‘open floodgates’ of crude oil export

The US Commerce Department approval last week permitting export of what is being referred to as ‘condensates,’ is a step in a direction that may prove to be a game-changer.

The US Commerce Department gave Pioneer Natural Resources Co and Enterprise Products Partners permission to ship a type of ultralight oil also known as condensates. It can be refined into gasoline or other fuels. Although crude oil still remains banned from export, under the rulings condensate can qualify as a refined product — and hence permitted to export — as long as the liquid is stabilised and distilled.

Washington had been edging towards lifting the crude oil export ban. In its decision, the US Bureau of Industry and Security (BIS) has determined that condensates minimally processed by cheaper units called stabilisers, which strip out volatile hydrocarbons to ensure safe transport in pipelines, may be freely exported. A beginning has been made.

“The flood gates of exports will be opened now,” Ed Morse of Citigroup was quoted by BBC as saying. Morse emphasised that some 200,000 to 300,000 barrels per day of US condensate could be exported by the end of this year and the volume could double in 2015.

The US is awash in light oil from shale formations, including the ultralight oil often being termed as condensate. From 2011 to 2013, US oil output soared by 1.8 million barrels a day, with 96 per cent of new production in the form of light or ultralight oil, according to the Energy Information Administration.

The exports would make the US a major oil exporter and add to its growing volume of fuel exports. Last year the country exported a record 2.7 million barrels of fuels per day, making the US the world’s largest exporter of gasoline, diesel and other fuels.

As a consequence of the ruling, shipment of condensates could begin as soon as August. Initially, the shipments will probably be small. The US could export 300,000 barrels of condensate per day by the end of the year, a Citi note says.

And this is bound to grow. On a global scale, the additional US production on the world market will mitigate price spikes, as it already has in response to the unrest in Iraq, Syria and Libya.

Congress is not expected to pass legislation lifting the ban on crude exports before the November 4 elections, as no lawmaker wants to be blamed for a move that could boost US oil prices.

One major argument against allowing the US crude to outside world has been that it might cause prices at local gas stations to jump. Not everyone seems to accept it. “It’s not credible to say that if we export more condensates that would cause a spike in prices at the pump,” said Citi commodity strategist Eric Lee.

However, there is a positive spin to the ongoing debate too. Any decision to lift restrictions on US crude exports would boost US production, rather lower gasoline prices, and support as many as 1 million additional jobs, energy consultancy IHS said in a report, adding that the elimination of crude export restrictions would benefit gross domestic product and government revenues too.


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Re: US Condensate Exports Begin

Unread postby Pops » Mon 30 Jun 2014, 07:36:36

Graeme wrote:The exports would make the US a major oil exporter and add to its growing volume of fuel exports. Last year the country exported a record 2.7 million barrels of fuels per day, making the US the world’s largest exporter of gasoline, diesel and other fuels.


Thanks G, this is where the confusion sets in, there are some fuels produced from condensate, premium unleaded for example, and it can be mixed into the regular crude oil flow to an extent and even into diesel but primarily it is chemical feedstock - it is what plastic is made from. You get propane and I don't know what all as well and they do burn but it isn't primarily used to make transport fuel in large percentages.

So the disconnect here - and I admit that it is just now dawning on me - is that the tight oil boom, even if it were to spread worldwide, isn't one that will ever impact transportation costs in a meaningful way.

Which, counter to the oil company's PR campaign and the press release reposters here and elsewhere, should be obvious by now to anyone who walks by a gas station
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Thu 03 Jul 2014, 17:40:49

And again it's difficult to grasp the "Big Picture" on the oil/condensate issue without spending a bit of time reading. For instance here's an article some might think has little bearing on the export issue:

Ergon to Add Condensate Stabilization Capacity in Appalachian Basin (FYI condensate stabilization is our industry code word for a condensate splitter):

"Ergon, Inc., Tuesday announced plans to enhance its subsidiaries’ facilities in the Appalachian Basin. The Appalachian Basin comprises the prolific Marcellus Shale and Utica Shale Plays. The regional area of operation for these companies spans all of Ohio, West Virginia, western Pennsylvania, and parts of Kentucky and New York. These subsidiaries’ assets and capabilities in the Appalachian Basin include a paraffinic refinery, a crude oil and condensate pipeline, six crude oil terminals, a fleet of more than 100 trucks, and eight boats and barges. The subsidiaries have spent over $75 million expanding tankage and enhancing crude and condensate gathering capabilities in support of crude oil and condensate producers in the Appalachian Basin over the last two years. Ergon plans to start up 10,000 barrels per day of condensate stabilization capacity at its Marietta, Ohio, river terminal. Startup of this capacity is anticipated for the fourth quarter of 2014 and will result in lower vapor pressure condensate for ultimate marketing. Additionally, Ergon plans to add 10,000 barrels per day of condensate stabilization in Newell, West Virginia, in 2015. Furthermore, Ergon plans to install new capacity at its 23,000 barrels per day specialty refinery in 2016."

IOW they are gearing up to convert unexportable oil/condensate into exportable "product". Now the long story that has to be appreciated. IMHO the folks at RBN are one of the best sources for cutting thru the fog. BTW notice what they say is the typical API weight of what most folks consider "condensate": 50 - 55 API. Much of the EFS production is in the low 40 API...just a tad lighter then what most call crude oil. Here's a good bit to absorb but well worth in IMHO.

"The crude oil market was agog yesterday with a news story broken by the Wall Street Journal that the Department of Commerce Bureau of Industry and Security (BIS) had provided letters of ruling to Pioneer Natural Resources and Enterprise Products Partners that would allow these companies to export a limited amount of wellhead condensate starting in August. If these rulings are more than just trial balloons sent up by the BIS to test the waters then they contradict previously accepted requirements for processing condensate before it could be exported. Depending on the yet-to-emerge fine print, these rulings could have a significant impact on US condensate exports as well as revenue prospects for those companies that have committed to throughput capacity at currently planned condensate splitters along the Gulf Coast. Today we navigate the nuances of the story. Regular RBN readers will be familiar with the condensate export saga from our many previous posts on the topic. The issue revolves around somewhat arcane definitions of hydrocarbon liquids produced at the wellhead, whether they count as crude oil or a lighter hydrocarbon called condensate and under what circumstances they can be exported. The latest of those posts from just a few weeks back imagined a world in which the export of condensate was allowed by the BIS (see Imagine There’s No Export Ban).

For those less well versed on matters condensate, we start with some definitions – feel free to skip this paragraph if you are a regular). Condensates are light hydrocarbons containing a significant percentage of naphtha range material. There is no universal standard for what defines a condensate, but some number between 50 and 55 degrees API gravity is typically the dividing line used to differentiate condensates from light crude oil (see Fifty Shades of Condensate Which One Did You Mean?). Some condensates can get much lighter, 80 degrees API or even higher. US condensate is arbitrarily divided into two broad categories. The first is lease condensate produced at or near the wellhead when it condenses from natural gas at surface temperature and pressure. Some lease condensate is also produced at the wellhead in stabilizer units designed to remove heavier hydrocarbons from natural gas (more on stabilizers later on). The second category is plant condensate, also known as natural gasoline, pentanes plus or C5+, that remains suspended in natural gas at the wellhead and is removed at a gas processing plant (see Like A Box of Chocolates – The Condensate Dilemma). Both categories of condensate are substantially similar in composition but the US Energy Information Administration (EIA) arbitrarily defines lease condensate as crude oil and plant condensate as a natural gas liquid (NGL -pentanes plus). Furthermore, Department of Commerce - Bureau of Industry and Security (BIS) regulations also define lease condensate as crude oil. As such, lease condensate is included in BIS regulations introduced in the 1970’s to restrict the export of US crude oil except to Canada or in specific circumstances from Alaska and California (see I Fought the Law). Thus lease condensate exports are prohibited even though plant condensate exports are perfectly legal.

But there is a further nuance to those BIS regulations that all of a sudden became the center of attention yesterday, and that is the extent of processing required for transforming lease condensate such that the export rules no longer apply to it. That is important because, if the BIS letters of ruling turn out to be a real indication of a wider policy change, then we will be dealing with a new definition of lease condensate and when it can be exported. We are not convinced that the BIS would actually make such a change with a ‘stealth” move like this, but you never know. To explain what all the fuss is about we start with what we know. Here’s the relevant section of the Federal regulations administered by the BIS – part of US Code Title 15 CFR 754.2 (see a complete copy here): ““Crude oil” is defined as a mixture of hydrocarbons that existed in liquid phase in underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities and which has not been processed through a crude oil distillation tower. Included are reconstituted crude petroleum, and lease condensate and liquid hydrocarbons produced from tar sands, gilsonite, and oil shale. Drip gases are also included, but topped crude oil, residual oil, and other finished and unfinished oils are excluded.”

Up until the WSJ story broke yesterday, most everyone assumed that the bit about “processed through a crude oil distillation tower” meant that if you wanted to export lease condensate you had to first process it through a refinery distillation tower. Trouble is that the production of increasing volumes of condensate from US shale plays – in particular in the Eagle Ford basin in South Texas, has overwhelmed the capability of US refiners to deal with this type of light hydrocarbon that most refineries were not designed to process in large volumes. During the past two years however, several US midstream companies have been busy making plans to build a kind of simple refinery called a condensate splitter (see Whole Lotta Splittin’ Goin On). These stand-alone units process condensate into its component fractions – mostly NGLs, naphtha and distillate or jet kerosene. Using a splitter allows a producer to transform lease condensate by a simple distillation process into hydrocarbon products that can then be exported."
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Re: US Condensate Exports Begin

Unread postby pstarr » Thu 03 Jul 2014, 17:54:41

Matt Mushalik over at Peak Oil Barrel asks whether US tight oil exported to Canada to dilute Canadian tar sands for syn crude is counted twice by EIA?

Runyan seems to think so.
Seems like it would be counted as production in the US, and listed as an export. Then included in the count of imported dilbit volume from Canada.
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Re: US Condensate Exports Begin

Unread postby Pops » Thu 03 Jul 2014, 18:23:54

then exported again as refined product when it's shipped out as diesel?

Ditto on RBN, it has a paywall but lots of good info in the teaser parts of the articles.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Fri 04 Jul 2014, 07:27:07

Pops - I thought of another way to qualify the utility of the light oil/condensate production from all our shales. Instead of trying to pick apart the well head stats I went to the refinery side of the dynamic and looked at US gasoline production. Today the US refiners are producing a bit more gasoline then before the light oil/condensate boom (http://www.eia.gov/dnav/pet/hist/LeafHa ... FRPUS2&f=W). But what makes that stat all the more significant IMHO is the change in the feedstock sources for that production. It's been very well documented that the import of crude oil has been significant reduced and replaced by our shale production. That seems to be an undeniable fact.

So the logic: the US is producing more motor fuel today then before the boom in light oil/condensate production from our shales. Additionally, production of light oil/condnsate from our shales constitutes a much larger percentage of the feedstock the refiners are using to create motor fuel today. Thus the conclusion: the light oils/condensate production from the US shales have been substituted for "crude oil" imports. IOW the light oil/condensate production is, from a practical standpoint, "oil" as most colloquially define it. At least that's how the stats look to me.
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Re: US Condensate Exports Begin

Unread postby Pops » Fri 04 Jul 2014, 08:45:54

Thanks ROCK, the interesting thing to me is here at the point where information is the hot "new" thing, and energy world is changing rapidly, the EIA gets their budget cut and there is less info coming out.

I tried to look at refinery inputs too but "crude oil" specifically includes
"Drip gases, and liquid hydrocarbons produced from tar sands, oil sands, gilsonite, and oil shale."
- so there ya go, LOL

Anyway, take a look at this page if you would and help me out. The "weekly input of gasoline blending components" is a negative number and has been falling - meaning they are removing them from the feedstock? (this is just the Gulf coast)

Image

They are defined as:
Naphthas (e.g., straight-run gasoline, alkylate, reformate, benzene, toluene, xylene) used for blending or compounding into finished motor gasoline. These components include reformulated gasoline blendstock for oxygenate blending (RBOB) but exclude oxygenates (alcohols, ethers), butane, and pentanes plus. Note: Oxygenates are reported as individual components and are included in the total for other hydrocarbons, hydrogens, and oxygenates.


"Naphtha" is defined elsewhere as condensate, but so is Pentane so I don't understand what - if anything this means.

ROCKMAN wrote:Additionally, production of light oil/condnsate from our shales constitutes a much larger percentage of the feedstock the refiners are using to create motor fuel today.

I don't know, maybe. There has definitely been a big swing in imports over the last few years between weights; a big drop in the 35-40 api over the last 2 years and increase in the heavier 20-25
Image
http://www.eia.gov/dnav/pet/pet_move_ipct_k_m.htm

I'm at a distinct disadvantage here, looking for a needle when I don't even know what one looks like, LOL
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Re: US Condensate Exports Begin

Unread postby basil_hayden » Fri 04 Jul 2014, 09:02:36

Fits in with the fact that the lighter oils from the Bakken and other shale plays produces more gasoline than diesel fuel per barrel of refinement - no need for as much blending components, might as well export what's close to transport.

Condensates are chemically and toxicologically more hazardous, too; Congress never seems to have an issue helping the petrochemical industry export its problems.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Fri 04 Jul 2014, 09:55:32

Pops - "I tried to look at refinery inputs too but "crude oil"." Yep...banged my head against that brick wall for a while until I got smart. LOL. That's why I think the best characterization we can do is just look at the big categories: we are producing more motor fuel in the US today then before the shale boom; the US is producing a lot more light oil/condensate today; we are importing less heavier crude oil today; most of the increased US production is the light oil/condensate. So back to my gross generalization: the light oil/condensate from our shales is functioning as a viable substitute for the heavier crude oils we had been importing.

So simply: if the condensate production is mostly just good for making "plastics" then where is all that motor we're producing coming from? Especially since we're importing millions of bopd of "conventional oil" less today? What are they making those 9+ million bbls/day of gasoline and the 4+ million bbls/day from if not from our "unconventional" production?

All I can do is "big picture". Don't have enough smarts and energy to break it down in more detail. LOL.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Fri 04 Jul 2014, 11:37:09

Pops - I hope you and the other editors don't get upset with the length of this post. If so just delete it with no hard feelings on my part. But I just would like folks to realize that "oil exports" are not a simple black and white dynamic. But often the discussion of US "oil exports" is just to simplistic.ī And believe it or not what follows isn't the complete story: This is just one rule appearing in the Federal Register for 15 CFR 754. And remember this is from your federal gov't'... the folk who are here to help us make life more simple. LOL,

(a) License requirement. As indicated by the SS notation in the “License Requirements” section of ECCN 1C981 on the CCL (Supplement No. 1 to part 774 of the EAR), a license is required for the export of crude oil to all destinations, including Canada. See paragraph (h) of this section for a License Exception permitting the export of certain oil from the Strategic Petroleum Reserves, paragraph (i) of this section for a License Exception for certain shipments of samples, and paragraph (j) of this section for a License Exception for exports of oil transported by pipeline over right-of-way granted pursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (43 U.S.C. 1652). “Crude oil” is defined as a mixture of hydrocarbons that existed in liquid phase in underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities and which has not been processed through a crude oil distillation tower. Included are reconstituted crude petroleum, and lease condensate and liquid hydrocarbons produced from tar sands, gilsonite, and oil shale. Drip gases are also included, but topped crude oil, residual oil, and other finished and unfinished oils are excluded.

(b) License policy.

(1) BIS will approve applications to export crude oil for the following kinds of transactions if BIS determines that the export is consistent with the specific requirements pertinent to that export:

(i) Exports from Alaska's Cook Inlet (see paragraph (d) of this section);

(ii) Exports to Canada for consumption or use therein (see paragraph (e) of this section);

(iii) Exports in connection with refining or exchange of strategic petroleum reserve oil (see paragraph (f) of this section);

(iv) Exports of heavy California crude oil up to an average volume not to exceed 25 MB/D (see paragraph (g) of this section);

(v) Exports that are consistent with international agreements as described in the statutes listed in paragraph (c) of this section;

(vi) Exports that are consistent with findings made by the President under an applicable statute, including the statutes described in paragraph (c) of this section; and

(vii) Exports of foreign origin crude oil where, based on written documentation satisfactory to BIS, the exporter can demonstrate that the oil is not of U.S. origin and has not been commingled with oil of U.S. origin. See paragraph (h) of this section for the provisions of License Exception SPR permitting exports of certain crude oil from the Strategic Petroleum Reserve.

(2) BIS will review other applications to export crude oil on a case-by-case basis and, except as provided in paragraph (c) of this section, generally will approve such applications if BIS determines that the proposed export is consistent with the national interest and the purposes of the Energy Policy and Conservation Act (EPCA). Although BIS will consider all applications for approval, generally, the following kinds of transactions will be among those that BIS will determine to be in the national interest and consistent with the purposes of EPCA.

(i) The export is part of an overall transaction:

(A) That will result directly in the importation into the United States of an equal or greater quantity and an equal or better quality of crude oil or of a quantity and quality of petroleum products listed in Supplement No. 1 to this part that is not less than the quantity and quality of commodities that would be derived from the refining of the crude oil for which an export license is sought;

(B) That will take place only under contracts that may be terminated if the petroleum supplies of the United States are interrupted or seriously threatened; and

(C) In which the applicant can demonstrate that, for compelling economic or technological reasons that are beyond the control of the applicant, the crude oil cannot reasonably be marketed in the United States.

(ii) Exports involving temporary exports or exchanges that are consistent with the exceptions from the restrictions of the statutes listed in paragraph (c) of this section.

(c) Additional statutory controls.

(1) The following statutes provide controls on the export of domestically produced crude oil based on its place of origin or mode of transport. If such other statutory controls apply, an export may only be approved if the President makes the findings required by the applicable law.

(i) Section 201 of Public Law 104-58, entitled “Exports of Alaskan North Slope Oil,” provides for exports of domestically produced crude oil transported by pipeline over rights-of-way granted pursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (43 U.S.C. 1652) (“TAPS crude oil”). The President made a determination on April 28, 1996.

(ii) The Mineral Leasing Act of 1920 restricts exports of domestically produced crude oil transported by pipeline over rights-of-way granted pursuant to section 28(u) of that Act (30 U.S.C. 185(u)) (“MLA”).

(iii) The Outer Continental Shelf Lands Act restricts exports of crude oil produced from the outer Continental Shelf (29 U.S.C. 1354) (“OCSLA”).

(iv) The Naval Petroleum Reserves Production Act restricts the export of crude oil produced from the naval petroleum reserves (10 U.S.C. 7430) (“NPRPA”).

(2) Supplement No. 3 to this part describes the relevant statutory provisions. In cases where a particular statute applies, a Presidential finding is necessary before the export can be authorized. You should note that in certain cases it is possible that more than one statute could apply to a particular export of crude oil.

(d) Exports from Alaska's Cook Inlet. The licensing policy is to approve applications for exports of crude oil that was derived from the state-owned submerged lands of Alaska's Cook Inlet and has not been, or will not be, transported by a pipeline over a federal right-of-way subject to the MLA or the Trans-Alaska Pipeline Authorization Act. 1


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Footnote(s):
1 On November 6, 1985, the Secretary of Commerce determined that the export of crude oil derived from State waters in Alaska's Cook Inlet is consistent with the national interest and the purposes of the Energy Policy and Conservation Act.

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(e) Exports to Canada for consumption or use therein.

(1) Except for TAPS crude oil, the licensing policy is to approve applications for exports of crude oil to Canada for consumption or use therein.

(2) The licensing policy for TAPS crude oil is to approve applications for an average of no more than 50,000 barrels of oil per day for consumption or use in Canada, subject to the following procedures and conditions:

(i) Any ocean transportation of the commodity will be made by vessels documented for United States coastwise trade under 46 U.S.C. 12106. Only barge voyages between the State of Washington and Vancouver, British Columbia, and comparable barge movements across waters between the U.S. and Canada may be excluded from this requirement. The Bureau of Industry and Security will determine, in consultation with the Maritime Administration, whether such transportation is “ocean” transportation; and

(ii) Authorization to export TAPS crude oil will be granted on a quarterly basis. Applications will be accepted by BIS no earlier than two months prior to the beginning of the calendar quarter in question, but must be received no later than the 25th day of the second month preceding the calendar quarter. For example, for the calendar quarter beginning April 1 and ending June 30, applications will be accepted beginning February 1, but must be received no later than February 25.

(iii) The quantity stated on each application must be the total number of barrels for the quarter, not a per-day rate. This quantity must not exceed 50,000 barrels times the number of calendar days in the quarter.

(iv) Each application must include support documents providing evidence that the applicant has either:

(A) Title to the quantity of barrels stated in the application; or

(B) A contract to purchase the quantity of barrels stated in the application.

(v) The quantity of barrels authorized on each license for export during the calendar quarter will be determined by the BIS as a prorated amount based on:

(A) The quantity requested on each license application; and

(B) The total number of barrels that may be exported by all license holders during the quarter (50,000 barrels per day multiplied by the number of calendar days during the quarter).

(vi) Applicants may combine their licensed quantities for as many as four consecutive calendar quarters into one or more shipments, provided that the validity period of none of the affected licenses has expired.

(vii) BIS will carry forward any portion of the 50,000 barrels per day quota that has not been allocated during a calendar quarter, except that no un-allocated portions will be carried over to a new calendar year. The un-allocated volume for a calendar quarter will be added, until expended, to the quotas available for each quarter through the end of the calendar year.

(f) Refining or exchange of Strategic Petroleum Reserve Oil.

(1) Exports of crude oil withdrawn from the Strategic Petroleum Reserve (SPR) will be approved if BIS, in consultation with the Department of Energy, determines that such exports will directly result in the importation into the United States of refined petroleum products that are needed in the United States and that otherwise would not be available for importation without the export of the crude oil from the SPR.

(2) Licenses may be granted to export, for refining or exchange outside of the United States, SPR crude oil that will be sold and delivered, pursuant to a drawdown and distribution of the SPR, in connection with an arrangement for importing refined petroleum products into the United States.

(3) BIS will approve license applications subject to the following conditions:

(i) You must provide BIS evidence of the following:

(A) A title to the quantity of barrels of SPR crude stated in the application; or

(B) A contract to purchase, for importation, into the United States the quantity of barrels of SPR crude stated in the application.

(ii) The following documentation must be submitted to BIS no later than fourteen days following the date that the refined petroleum products are imported in the U.S. in exchange for the export of SPR crude:

(A) Evidence that the exporter of the SPR crude has title to or a contract to purchase refined petroleum product;

(B) A copy of the shipping manifest that identifies the refined petroleum products; and

(C) A copy of the entry documentation required by the U.S. Customs Service that show the refined petroleum products were imported into the United States, or a copy of the delivery receipt when the refined petroleum products are for delivery to the U.S. military outside of the United States.

(4) You must complete both the export of the SPR crude and the import of the refined petroleum products no later than 30 days following the issuance of the export license, except in the case of delivery to the U.S. military outside of the United States, in which case the delivery of the refined petroleum products must be completed no later than the end of the term of the contract with the Department of Defense.

(g) Exports of certain California crude oil. The export of California heavy crude oil having a gravity of 20.0 degrees API or lower, at an average volume not to exceed 25 MB/D, will be authorized as follows.

(1) Applicants must submit their applications in accordance with §§ 748.1, 748.4 and 748.6 of the EAR.

(2) The quantity stated on each application must be the total number of barrels proposed to be exported under the license—not a per-day rate. This quantity must not exceed 25 percent of the annual authorized export quota. Potential applicants may inquire of BIS as to the amount of the annual authorized export quota available.

(3) Each application shall be accompanied by a certification by the applicant that the California heavy crude oil:

(i) Has a gravity of 20.0 degrees API or lower;

(ii) Was produced within the state of California, including its submerged state lands;

(iii) Was not produced or derived from a U.S. Naval Petroleum Reserve; and

(iv) Was not produced from submerged lands of the U.S. Outer Continental Shelf.

(4) Each license application must be based on an order, and be accompanied by documentary evidence of such an order (e.g., a letter of intent).

(5) BIS will adhere to the following procedures for licensing exports of California heavy crude oil:

(i) BIS will issue licenses for approved applications in the order in which the applications are received, with the total quantity authorized for any one license not to exceed 25 percent of the annual authorized volume of California heavy crude oil.

(ii) BIS will approve only one application per month for each company and its affiliates.

(iii) BIS will consider the following factors (among others) when determining what action should be taken on individual license applications:

(A) The number of licenses to export California heavy crude oil that have been issued to the applicant or its affiliates during the then-current calendar year;

(B) The number of applications pending in BIS that have been submitted by applicants who have not previously been issued licenses under this section to export California heavy crude oil during the then-current calendar year; and

(C) The percentage of the total amount of California heavy crude oil authorized under other export licenses previously issued to the applicant pursuant to this section that has actually been exported by the applicant.

(iv) BIS will approve applications contingent upon the licensee providing documentation meeting the requirements of both paragraphs(g)(5)(iv)(A) and (B) of this section prior to any export under the license:

(A) Documentation showing that the applicant has or will acquire title to the quantity of barrels stated in the application. Such documentation shall be either:

(1) An accepted contract or bill of sale for the quantity of barrels stated in the application; or

(2) A contract to purchase the quantity of barrels stated in the application, which may be contingent upon issuance of an export license to the applicant.

(B) Documentation showing that the applicant has a contract to export the quantity of barrels stated in the application. The contract may be contingent upon issuance of the export license to the applicant.

(v) BIS will carry forward any portion of the 25 MB/D quota that has not been licensed, except that no unallocated portions will be carried forward more than 90 days into a new calendar year. Applications to export against any carry-forward must be filed with BIS by January 15 of the carry-forward year.

(vi) BIS will return to the available authorized export quota any portion of the 25 MB/D per day quota that has been licensed, but not shipped, during the 90-day validity period of the license.

(vii) BIS will not carry over to the next calendar year pending applications from the previous year.

(6) License holders:

(i) Have 90 calendar days from the date the license was issued to export the quantity of California heavy crude oil authorized on the license. Within 30 days of any export under the license, the exporter must provide BIS with a certified statement confirming the date and quantity of California heavy crude oil exported.

(ii) Must submit to BIS, prior to any export under the license, the documentation required by paragraph (g)(5)(iv) of this section.

(iii) May combine authorized quantities into one or more shipments, provided that the validity period of none of the affected licenses has expired.

(iv) Are prohibited from transferring the license to another party without prior written authorization from BIS.

(7) BIS will allow a 10 percent tolerance on the unshipped balance based upon the volume of barrels it has authorized. BIS will allow a 25 percent shipping tolerance on the total dollar value of the license. See § 750.11 of the EAR for an explanation of shipping tolerances.

(h) License Exception for certain shipments from the Strategic Petroleum Reserves (SPR). Subject to the requirements set forth in this paragraph, License Exception SPR may be used to export without a license foreign origin crude oil imported and owned by a foreign government or its representative which is imported for storage in, and stored in, the United States Strategic Petroleum Reserves pursuant to an appropriate agreement with the U.S. Government or an agency thereof. If such foreign origin oil is commingled with other oil in the SPR, such export is authorized under License Exception SPR only if the crude oil being exported is of the same quantity and of comparable quality as the foreign origin crude oil that was imported for storage in the SPR and the Department of Energy certifies this fact to BIS.

(1) The requirements and restrictions described in §§ 740.1 and 740.2 of the EAR that apply to all License Exceptions also apply to the use of License Exception SPR.

(2) A person exporting crude oil pursuant to this License Exception must enter on any required Shipper's Export Declaration (SED) or Automated Export System (AES) record the letter code “SS-SPR” or the equivalent code as set forth in appendix C to 15 CFR part 30.

(i) License Exception for certain sample shipments. Subject to the requirements set forth in this paragraph, License Exception SS-SAMPLE may be used to export crude oil for analytic and testing purposes.

(1) An exporter may ship up to 10 barrels of crude oil to any one end-user annually, up to an annual cumulative limit of 100 barrels per exporter.

(2) The requirements and restrictions described in §§ 740.1 and 740.2 of the EAR that apply to all License Exceptions also apply to the use of License Exception SPR.

(3) A person exporting crude oil pursuant to this License Exception must enter on any required Shipper's Export Declaration (SED) or Automated Export System (AES) record the letter code “SS-SAMPLE” or the equivalent code as set forth in appendix C to 15 CFR part 30.

(j) License Exception for exports of TAPS Crude Oil.

(1) License Exception TAPS may be used to export oil transported over right-of-way granted pursuant to section 203 of the Trans-Alaska Pipeline Authorization Act (TAPS), provided the following conditions are met:

(i) The TAPS oil is transported by a vessel documented under the laws of the United States and owned by a citizen of the United States (in accordance with section 2 of the Shipping Act, 1916 (46 U.S.C. app. 802));

(ii) All tankers involved in the TAPS export trade use the same route that they do for shipments to Hawaii until they reach a point 300 miles due south of Cape Hinchinbrook Light and then turn toward Asian destinations. After reaching that point, tankers in the TAPS oil export trade must remain outside of the 200 nautical mile Exclusive Economic Zone, as defined in 16 U.S.C. 1802(6). Tankers returning from foreign ports to Valdez, Alaska must abide by the same restrictions, in reverse, on their return route. This condition shall not be construed to limit any statutory, treaty or Common Law rights and duties imposed upon and enjoyed by tankers in the TAPS oil export trade, including, but not limited to, force majeure and maritime search and rescue rules; and

(iii) The owner or operator of a tanker exporting TAPS oil shall:

(A) Adopt a mandatory program of deep water ballast exchange (i.e., at least 2,000 meters water depth). Exceptions can be made at the discretion of the captain only in order to ensure the safety of the vessel and crew. Records must be maintained in accordance with paragraph (j)(3) of this section.

(B) Be equipped with satellite-based communications systems that will enable the Coast Guard independently to determine the tanker's location; and

(C) Maintain a Critical Area Inspection Plan for each tanker in the TAPS oil export trade in accordance with the U.S. Coast Guard's Navigation and Inspection Circular No. 15-91 as amended, which shall include an annual internal survey of the vessel's cargo block tanks.

(2) Recordkeeping requirements for deep water ballast exchange.

(i) As required by paragraph (j)(1)(iii)(A) of this section, the master of each vessel carrying TAPS oil under the provisions of this section shall keep records that include the following information, and provide such information to the Captain of the Port (COTP), U.S. Coast Guard, upon request:

(A) The vessel's name, port of registry, and official number or call sign;

(B) The name of the vessel's owner(s);

(C) Whether ballast water is being carried;

(D) The original location and salinity, if known, of ballast water taken on, before an exchange;

(E) The location, date, and time of any ballast water exchange; and

(F) The signature of the master attesting to the accuracy of the information provided and certifying compliance with the requirements of this paragraph.

(ii) The COTP or other appropriate federal agency representatives may take samples of ballast water to assess the compliance with, and the effectiveness of, the requirements of paragraph (j)(3)(i) of this section.
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Re: US Condensate Exports Begin

Unread postby Pops » Fri 04 Jul 2014, 14:06:14

ROCKMAN wrote:So simply: if the condensate production is mostly just good for making "plastics" then where is all that motor we're producing coming from? Especially since we're importing millions of bopd of "conventional oil" less today?

Obviously light oil can be refined to make gasoline, no argument, I said as much way up there.

But it seems just as obvious that there is a limit to the amount that can be blended with heavier oil at least at US refineries. The amount of light oil we're importing has fallen by 2/3 while the percentage of heavier almost doubled.

Just on those 2 observations the question is why go to the expense of building new facilities to crack the light oil making it acceptable for export if it could just as well be made into gasoline and continue replacing imports of heavier oil?

My thought is because it is less useful for making fuels and more so for feedstock, as the discount on condensate to other oils seems to indicate. I'm not saying there is any firm rule, just trying to figure out why, with the LTO glut, unleaded is only about 10% less than July 2008

I'm no chemist but I do know you are more liable to get a passable martini with all gin than all vermouth.
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Re: US Condensate Exports Begin

Unread postby Synapsid » Fri 04 Jul 2014, 17:00:49

Pops,

"...the amount of light oil we import has fallen by two thirds while the percentage of heavier oil has almost doubled." Or words to that effect.

That's comparing amount to percent. The chart you show above is a % chart with two curves; on such a chart, if one drops the other will have to rise. On one of your charts a couple of days ago, though, amounts of light oil imported had increased while amounts of heavier had remained the same. Wouldn't the latter give us the real picture?
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Re: US Condensate Exports Begin

Unread postby Pops » Sat 05 Jul 2014, 09:10:34

Thanks syn. To clarify, I'm simply saying that what all the hoopla is about is a particular type of light oil and natural gas liquid that has limited usefulness as a refinery feedstock.

The percentage of imported lightweight oils has fallen to near zero indicating that we are reaching the limit of how much that new oil will help the situation in the US from here.

That of course is the reason for the push for exports, if we could simply continue replacing all imports with the new LTO we would obviously do that, but we can't aparently.

Further proof is that the price of unleaded has not fallen and in fact is only about 10% under it's all time modern high from 6 years ago even though the US is now The Number One Producer.


The disconnect there seems obvious to me
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