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Condensate...condensed.

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

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Re: US Condensate Exports Begin

Unread postby Synapsid » Sat 05 Jul 2014, 13:48:39

Pops,

Arrgh---"amounts of imported light oil had decreased..." My mistake.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Sat 05 Jul 2014, 15:09:39

Pops - "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". A very valid question. And not being a refinery guy I'll go out a limb and answer. The GC refineries can make motor fuel out of the light oil. Heck, in S Africa Sasol makes motor fuel out of NG...can't get much lighter then that. LOL. The big issue (I think) is the efficiency of doing so. And that efficiency equates to profit margin. And profit margin equates to what a refiner can pay for its feedstock. I think Eagle Ford production is going to Canadian refineries not because GC can't crack it but because the Canadians can outbid our refineries because they can, despite the transport costs, make more profit. Remember the eastern Canadian refineries are substituting the EFS output for Nigerian Bonnie...I think one of the premium crude.

But again back to what I still believe is THE core issue: how much crude oil have you (and every reading this post) purchased in the last year? I'm to go way out on the limb and guess none. LOL. If so then you don't really give a rat's ass what oil was priced at during the last year. But I bet you bought a fair bit of refined products. Refined products you had to bid for against foreigners. Imagine what you might have spent if those foreign buyers had not been able to make their purchases and the refiners had to sell those 3 MILLION BBLS of product in the US. The refiners compete with each other for oil. The American public currently competes with other global consumers for refined products. How much oil the US does or doesn't export has little to no impact that competition IMHO.
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Re: US Condensate Exports Begin

Unread postby Pops » Sun 06 Jul 2014, 06:21:24

ROCK, I've read they used to call condensate "natural gasoline" and that blended with a little ethanol some it would run fine in a flex fuel ICE.

No doubt it is about what's profitable with the equipment they have, that's what I'm harping on. What they're fracking from shale now isn't what they were drilling from reservoirs a while back. More and more it is clear that they really don't expect this to last, no pipeline commitments, no refinery reconfiguration, just rail it to a cheap cracker and ship it ASAP!

The average bear doesn't care where it comes from as long as something comes out when he squeezes the trigger at the Quik Sack, but what he does care about is what it costs and ostensibly that the the US be "energy independent" (which probably just equals "cheap"). Obviously the fact that prices are near where the were in '08 should be an indication that there is a disconnect somewhere.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Tue 22 Jul 2014, 15:44:19

Pops – Some very interesting new details on the Commerce Dept decision to allow those companies to export condensate. Turns out I might have been wrong if this article is correct. They didn’t just approve what has been happening but redefined the definition of “refined product”. What thru me originally was the use of the term “stabilizer”. Now I think I understand is that it’s nothing more than the common separator we have on most wells that produce methane and lighter fractions with the oil stream. This is different than a JT plant that removes the NGL from the NG stream at the well site. If I’m interpreting this correctly all those multimillion $ cracking units being built in S Texas may not be necessary if an operator can just run his EFS through his well site separator (which I suspect most already have installed) and thus haul “refined product’ off his lease and be able to export it:

“In late June, an article in The Wall Street Journal revealed that the U.S. Commerce Department’s Bureau of Industry and Security (BIS) had granted permits to two Texas producers, Pioneer Natural Resources (PNR-NYSE) and Enterprise Product Partners (EPD-NYSE), enabling them to export some of their Eagle Ford light oil output. Immediately, the question was posed as to whether these permit awards reflected a change in federal government policy with respect to the exporting of American crude oil, a ban that has existed since after the 1973 Arab oil embargo forced this country to examine the outlook for our domestic oil industry.

As often happens, it is the details that need to be focused on to understand what these permits allow and whether they signal anything other than one-off events: “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. 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. 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.

Both categories of condensate are substantially similar in composition but the EIA arbitrarily defines lease condensate as crude oil and plant condensate as a natural gas liquid (NGL -pentanes plus). Furthermore, 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. Thus, lease condensate exports are prohibited even though plant condensate exports are perfectly legal.”

So what is going on with the permits? BIS appears to have changed the definition of what it means to be “processed through a crude oil distillation tower.” Prior to the granting of these permits, the industry’s assumption was that in order to export lease condensate you needed to send it through a refinery distillation tower. Now the question is has BIS redefined the “refinery distillation tower” terminology to include treating condensate through a wellhead process called stabilization. Stabilization is the process used to extract most field condensates, and it is done by separating out lighter, more volatile components of the condensate stream from its heavier liquids. The heavier products are sent into pipelines or stored in well site tanks to be picked up by trucks or to be shipped by pipelines later. A stabilizer is designed to make lease condensate stable and safer for pipeline transportation. The important point is that the stabilizer is designed to make condensates safer for transport and not to break it into its component parts.

If BIS has redefined the amount of processing needed to transform lease condensate into a product that can be exported, then we would have a potential game-changing policy. Mr. Fielden blogs for RBN Energy and in his tweet he said that RBN estimates there are 1.2 million barrels a day of lease condensate being treated by stabilizers, which it predicts will grow to 1.6 mmb/d by 2018. Presumably, all of this output would be eligible for export if BIS truly has changed its definition. What some people are wondering is whether this change in the treatment definition might encourage producers to treat other light oil streams in order to be able to export it. BIS has stated it has not changed the crude oil export policy and most industry analysts accept the statement at face value. They argue that BIS knows it would need congressional legislation to overcome the 1975 crude oil export ban. Given concerns among Washington politicians that allowing U.S. crude oil exports will help corporations and hurt consumers, it is hard to see any export legislation being approved.”

But notice at the end they lose focus of the reality (“…that allowing U.S. crude oil exports will help corporations and hurt consumers…”) that American consumers don’t buy oil…they buy refined products: Refined products that are legal to export and thus the US consumers compete with the rest of the world for those commodities. And they don’t compete for oil.
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Re: US Condensate Exports Begin

Unread postby Pops » Tue 22 Jul 2014, 16:32:29

Thanks ROCK, I've learned a lot from RBN (just from the free part). So if I get it it's like this:

Americans buy US made unleaded at the world price because there is no restriction on gasoline exports.

Because crude exports are restricted and production of lighter weights of crude/condensate are now higher than in the past, US refiners benefit from artificially US low crude oil prices.

So keeping the ban in place benefits refiners at the expense of drillers. Allowing exports of crude (or some portion of the very light/condensate portion) would enable drillers to make a higher profit (eliminating some of the Brent/WTI spread) and perhaps drill more. The refiners would pay a higher price for inputs but since they sell on the world market anyway, no big deal.

In any case, US consumers don't benefit from US crude in either way because we've been paying world prices at the pump right along. Although they do get lots of bucks in royalties/taxes/etc.


As I see it, the upshot is the drillers want to do away with any restriction whatsoever on exports and do it right now helped along by the "Frickin Revolution" because as we go down the slope there will be lots of furiners willing to pay really big bucks for their oil.
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Re: US Condensate Exports Begin

Unread postby ROCKMAN » Wed 23 Jul 2014, 11:35:29

Exactly Pops. One big benefit is that our refiners pay pretty good salaries so exporting product vs oil benefits that job market. OTOH if the drillers can get a better profit margin then they'll drill more, hire more and pay more taxes and royalties. And as you put it, while the US oil biz gets the gold mine the US consumers get the shaft. Just as Dog and Mother Earth meant it to be. LOL.
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Condensate...condensed.

Unread postby ROCKMAN » Sat 04 Oct 2014, 01:56:30

Some added chatter to the subject:

The Department of Commerce commodity classification decision allowing the export of condensates in one specific instance earlier this year fanned the flames of the crude oil export debate. A previous Petro Primer post discusses why this decision was erroneously misinterpreted as a move to open the doors to unfettered exports of crude oil. However, the ensuing attention to the decision has generated debate about two critical policy questions: What exactly is a condensate? And what does defining a condensate mean for the crude export debate? The answers are not apparent and provide another example of the need for a comprehensive approach to energy policy.

Oddly enough, there is not even a common industry definition of condensate. The head of the U.S. Energy Information Administration recently stated, “What condensate is, is up in the air.” It is generally considered a very light type of crude oil with API gravity somewhere north of 45 degrees, but this is not the only metric that could be used in formulating a more exact definition. For example, a condensate designation could be based on the chemical composition of a hydrocarbon mixture. Various states also have several different condensate definitions (such as CO, LA, MT, ND, OK, SD, TX, and WY). Additionally, as discussed in the previously referenced post, there is plant condensate, which is one of several products generated in a natural gas processing plant, and lease condensate, which is condensate produced at the wellhead of an upstream crude oil or natural gas operation. Plant condensate can be exported without restriction, while the crude oil export restrictions apply to lease condensate.

The diversity of options for defining condensate creates several challenges for expanding crude oil exports. The Department of Commerce (Title 15 CFR 754.2) defines crude oil in the following manner:

"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.

The Department of Commerce Bureau of Industry Security (BIS) commodity classification decisions earlier this year seemed to indicate that lease condensate could be exported if 1) it was the result of crude oil passing through a distillation tower and 2) the products left after crude is moved through such a tower are significantly different than the crude oil input. Seem fairly straightforward? Not so much. There are various forms of distillation with varying degrees of complexity. This raises the question of how much processing is required for something to be considered eligible for export.

To date, this decision has been made on a case by case basis through the BIS process. However, a group of refiners concerned with the Administration’s condensate classification recently challenged such decisions in a letter to Department of Commerce officials. The group argues precedent and the language of the regulation clearly distinguishes between “surface separation facilities,” which it believes was the process through which the condensate approved for export underwent, and more complex crude distillation. Such concerns, along with the myriad of possible definitions, are likely the reasons why the federal government has begun working with stakeholders to try and find an agreed upon designation.

In complex legal matters such as these, when there are many definitions, that usually means there are effectively no definitions. Such lack of certainty could mean lengthy litigation surrounding any administrative attempt to expand crude oil exports. These considerations emphasize why the crude export debate is best left in Congress’ hands. For better or for worse, Congress is the only body that can provide true certainty through clear changes to the statutory language, rather than administrative changes to the existing regulation open to potentially time consuming court battles. In addition to addressing key policy questions surrounding crude oil exports, the legislative process will allow Congress to explore energy policy holistically and examine what other regulatory barriers may also need to be addressed to ensure America can take full advantage of the domestic oil and natural gas boom, while also positioning itself as a pillar of global energy security.

{And as I've pointed out before Texas makes the distinction between condensate and crude oil based upon certain reservoir metrics at the time of production... not the gravity of that liquid hydrocarbon. In fact production from a specific well might be classified as condensate but the identical oil could be reclassified several years later as crude oil when those reservoir metrics change. So when the Texas stats say X million bbl's of "condensate" has been produced what exactly h's been produced?}
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Re: Condensate...condensed.

Unread postby GHung » Sat 04 Oct 2014, 08:47:24

Depends on what the definition of 'is' is.
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Re: Condensate...condensed.

Unread postby ROCKMAN » Sat 04 Oct 2014, 12:22:16

Ghung - Or more specifically whose definition of "is" you're using. And thus the problem when anyone throws around the condensate metrics: they seldom qualify which definition they use. Condensate, plant condensate, "LTO", light oil, upgraded condensate, oil, lease condensate, crude, stabilized oil, stabilized hydrocarbon, crude oil, C5+, pentane, condensate stabilizer, gas condensate, etc. etc. etc.

So many terms... so little understanding. LOL.
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Re: Condensate...condensed.

Unread postby pstarr » Sat 04 Oct 2014, 12:33:24

It seems to me the definitions (whichever one used) are designed to service a broader public policy; to add value to an extracted natural resource. So we can export refined products because the refinery creates jobs, depends on (hopefully our) intellectual property, and thus multiplies the general good. Likewise those condensates depend on equipment and labor at the GOSP (or wherever they are siphoned off?)

As you article said, the decision needs ultimately to be made by congress. Otherwise (with my above assumption) even fracted crude might actually be a value-added product (lots of new intellectual property and secondary industries such as pumping equipment, propants and labor) and should be sold to an export market. So to would be tar sands etc. Just sayin'
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Re: Condensate...condensed.

Unread postby sparky » Sat 04 Oct 2014, 14:53:47

.
Is there a problem using the chemical composition as a definition
I.E. butane , pentane , hexane , heptane , octane ?????
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Re: Condensate...condensed.

Unread postby westexas » Sat 04 Oct 2014, 15:19:39

Of course, the most critical difference between crude oil and condensate is the distillate yield. Check out the graph in the following article (you can click on graph for a larger image):

http://www.nrcan.gc.ca/energy/crude-petroleum/4561

It would appear that distillate yield drops by half going from just 39 API gravity crude to 42 API gravity crude (from about 24% to about 12%). Note that they refer to 42 gravity crude as "condensate."

Also, following is a chart of API Gravity versus sulfur content for 16 types of global crude oil. Note the cutoff point for API gravity:

Image
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Re: Condensate...condensed.

Unread postby ROCKMAN » Sat 04 Oct 2014, 21:50:11

Westexas beat me to point I was planning to hit by posting that article (had to run out and perforate a little NG well this afternoon): all those folks here that buy crude oil, condensate, LTO, lease condensate, etc. raise you hand. I don't see any hands.

IMHO the critical metrics are the volumes of products made from any and every source. This would also include biofuels...even the insignificant volume med from Burger King fryer grease. As that wise west Texas geologist points out it doesn't make a difference to the consumer if he fills his car up with gasoline made from corn, crude oil, EFS condensate or even NG. Yes: the mix of liquid hydrocarbon sources is changing... so what? How much gasoline is being produced today and what does it cost? How much gasoline will be produced in the future and what will it cost? Same questions for diesel, fuel oil, etc. While the nature of the source has an impact it's far from being the sole determination of the answer to those questions. The price of crude oil is near the all time yearly average. But so is condensate and all other liquid hydrocarbons. And while the US is exporting relatively little oil/condensate/etch we are exporting record volumes of refined products.
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Re: Condensate...condensed.

Unread postby marmico » Sun 05 Oct 2014, 07:44:49

What's the issue?

U.S. refinery product slate
http://www.eia.gov/dnav/pet/hist/LeafHa ... RAPUS2&f=A

U.S. refinery distillate yield
http://www.eia.gov/dnav/pet/hist/LeafHa ... IRYUS3&f=M
Last edited by marmico on Sun 05 Oct 2014, 08:14:52, edited 1 time in total.
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Re: Condensate...condensed.

Unread postby westexas » Sun 05 Oct 2014, 08:02:28

Since virtually all the increase in global production since 2005 has been on the light end, it's very likely that global distillate production has not shown a material increase since 2005.

Here is the chart linked above:

Image

As noted above, as the crude feedstock goes from 39 gravity to 42 gravity, distillate yield drops from about 24% to 12%. Conversely, gasoline yield increases from about 27% to about 70%. We would see similar trends going from 42 to 45 gravity and higher.

Bottom line in my opinion is that it is very likely that global crude oil production (generally defined as 45 and lower API gravity crude) effectively peaked in 2005, while global natural gas production--and associated liquids, condensate and NGL--have so far continued to increase.
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Re: Condensate...condensed.

Unread postby ROCKMAN » Sun 05 Oct 2014, 14:22:25

"...it's very likely that global distillate production has not shown a material increase since 2005." And wouldn't that be part of the explanation for higher fuel prices (besides higher crude prices) since 2005: the lighter oils require more upgrading and thus a higher refining cost. On paper we could supply consumers with motor fuels made solely from NG. It would just cost a lot more...a great deal more. And thus the meaningful impact of the shift from heavier to lighter liquids.

Bottom line: it's all about the source of hydrogen and carbon atoms. The less it costs to construct the chains needed to run the economy the better. Unfortunately as the source of those atoms changes so does the cost.
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Re: Condensate...condensed.

Unread postby sparky » Mon 06 Oct 2014, 20:36:38

.
unless I'm mistaken , in the Hydrocarbon , it's the carbon atoms which contain the most energy
the Hydrogen is very useful to make the stuff liquid and easy to transport , transfer and ignite in an internal explosion engine
but for power the distillates are better , that's jet fuel and heating oil
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Re: Condensate...condensed.

Unread postby Synapsid » Mon 06 Oct 2014, 22:27:12

sparky,

The distillates are jet fuel and diesel, as regards transportation; the world runs on diesel to a great extent. westexas' bar graphs show that condensate, sensu lato, is great for gasoline but not so much for diesel.

There, as they say, lies the rub.
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Re: Condensate...condensed.

Unread postby toolpush » Mon 06 Oct 2014, 23:37:54

If diesel is going to be harder to get and the lighter fuels (Naphtha) more abundant, then maybe a slight change in engines may work?

http://www.greencarcongress.com/2013/10 ... phtha.html

Dr. Gautam Kalghatgi and his colleagues at Saudi Aramco and other organization such as FEV, RWTH Aachen University, and Shell Global Solutions, have been investigating the potential use of naphtha as an alternative compression-ignition (CI) fuel that offers a number of benefits, including efficient combustion; low soot and NOx emissions resulting in a less complicated after treatment system to meet modern emissions standards; and a fuel that is simpler to make than current gasoline or diesel fuels.
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Re: Condensate...condensed.

Unread postby ROCKMAN » Tue 07 Oct 2014, 08:10:22

pusher - Such plans reminded me of the cartoon with the guy clawing his way to the rear of the jet as it plummets from 35,000': he'll survive a little longer than the other passengers. LOL. The problem with any hydrocarbon substitute made from another hydrocarbon is that we are producing less of many of those H/C chains and what we are producing is costing a lot more. Even EV's that are powered from fossil fuel sourced utilities have the same problem...eventually.

The only way to escape the trap with respect to transportation might be EV’s fueled by power derived from renewable resources. But that solution has two major hurdles IMHO: costs (again) and, perhaps even a bigger problem, the time factor.
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