[westexas]

Ron Patterson pulled together some annual OPEC 12 production data for me. In regard to Crude + Condensate (C+C) production data, note that condensate production is a byproduct of natural gas production. The OPEC countries track crude only production (not C+C).

If we round off to the nearest one mbpd (assuming that we have two significant figures of semi-accurate data) and use complete annual data (through 2012), OPEC 12 crude only production was 31 mbpd in 2005 and in 2012 (no increase in seven years), while EIA OPEC 12 C+C production was 32 mbpd in 2005 and 33 mbpd in 2012 (3.1% higher than 2005).

Global C+C was 74 mbpd in 2005 and 76 mbpd in 2012 (2.7% higher than 2005). If we assume that the OPEC 12 countries are a reasonable representative sampling of global production (and of course we have a lot of condensate production in the US, which accounts for all of the recent increase in global C+C production), in my opinion it’s a reasonable inference that we have not seen a material increase in global crude oil production (generally defined as 45 or lower API gravity) since 2005. Of course, we need crude oil to refine petroleum based distillates (although distillates can be synthesized using a gas to liquids process).

So, based on the foregoing, in my opinion it’s a reasonable conclusion that virtually 100% of the increase in global liquids production since 2005 has been condensate, NGL’s and biofuels. In other words, in my opinion virtually 100% of the increase in global liquids production since 2005 has been from byproducts of natural gas production and from biofuels.

[dorlomin]

This has been doing the rounds suggesting that US shale alone is keeping the C&C figures up. Saudi likely has some spare capacity and Iraq may have a bit more to squeeze out, but its looking closish to peak from my uneducated position.

[ROCKMAN]

"...it’s a reasonable conclusion that virtually 100% of the increase in global liquids production since 2005 has been condensate". Actually no. It might be the majority of the increase but I'm not sure even about that. None of the new DW GOM production since 2005 has been C. The majority of the wells I drilled in the last 4 years have produced oil and not C. I've been producing 400 bopd of nice sweet crude for a well in La. for over a year. But that's just little ole me. But there are a lot of little ole me's that have been drilling oil wells in the Gulf Coast since 2005. And then there’s someone a tad bigger than little ole me: Angola is the second-largest oil producer in Sub-Saharan Africa, behind Nigeria. In 2013, Angola produced 1.8 million barrels per day (bbl/d) of petroleum and other liquids, of which more than 1.7 million bbl/d was crude oil. Angola's oil production grew by an annual average of more than 15% from 2002 to 2008 as production started from multiple deepwater fields.

I also wonder how much C has been produced in the ME that was blended with their heavy crude and sold for a higher price.

Again I won't try to guess the magnitude of the difference between C and "crude oil". And remember what I've pointed out before: some of the "condensate" produced for the Eagle Ford Shale is reported as "oil" by the state and not C.

[Tanada]

With no significant increase in 9 years despite incredible prices compared to 10 years ago IMO the only thing holding up production is the price. There is at least one TV show in the USA dedicated to the phenomenon that people with property holding in Kentucky are wildcatting wells in dreams of getting rich because even a 10 bpd stripper well pays off in months and after that its pure profit. I know they don't add up to a heck of a lot, but they slow down the decline year in and year out.


Careful with the volume the web page has an embedded add that plays loudly over the speakers if it catches you off guard. http://www.discovery.com/tv-shows/backyard-oil

[Pops]

I got your million barrels right here WT - or most of it . . .

[zaphod42]

Rockman said,

I also wonder how much C has been produced in the ME that was blended with their heavy crude and sold for a higher price.

Can you answer a question about that? Is the heavy crude easier to move about when mixed with C, and is that why it is done? In addition, of course, to getting that premium price.

Craig

[westexas]

Rock,

Rounding off to two significant figures, if we focus on C+C, the increase in global production from 2005 to 2012 was 2 mbpd. So, the question is, what percentage of that 2 mbpd was condensate?

If we go back to the OPEC versus EIA data for the OPEC 12 production and take the data sets at face value, it implies that OPEC accounted for about one mbpd of increased condensate production from 2005 to 2012 (OPEC crude was flat and the EIA showed a one mbpd increase from 2005 to 2012), and OPEC accounts for 43% of global C+C production.

Again taking the above OPEC/EIA data at face value, If the other producing countries, accounting for 57% of global production, had no increase in condensate production--not likely since that number includes the US--the implied increase in global crude oil production would only be one mbpd.

I think a more likely scenario is that the other 57% accounted for at least another one mbpd increase in condensate production, and actual global crude oil production--the stuff that Jed Clampitt* found--was probably flat to down from 2005 to 2012.

Incidentally, if we look at the Texas RRC data versus the EIA data, it appears that the implied increase in Texas condensate production from 2005 to 2012 was about 0.2 mbpd. So, OPEC + Texas, accounting for 46% of global C+C production, would account for about 1.2 mbpd of increased condensate production, which alone would account for about 60% of the 2 mbpd increase in C+C production from 2005 to 2012.

*Beverly Hillbillies, "Black gold, Texas tea"

[ROCKMAN]

Wt - "...the question is, what percentage of that 2 mbpd was condensate?" but the difficulty there is that your number must be a net increase.
Consider how much non-condensate oil has come on from just the DW GOM and the Canadian oil sands.

[ROCKMAN]

Zap - "Can you answer a question about that? Is the heavy crude easier to move about when mixed with C, and is that why it is done?" Here's an indirect way to answer: are you aware that the millions of bbls of Canadian oil sands production has to be diluted about 30% with distillate so it can be pumped? Believe it or that's one of the problems exporting that crap: the need for condensate diluent. They are planning to build a pipeline to haul the condensate from the Gulf Coast to Alberta. One company is building the first diluent recovery faculty to pull the condensate out after they pipeline the crap from the fields to the border. From there the undiluted crap is hauled by heated tank cars or unheated ones that have to be heated once the peanut butter consistency crap gets to where it's going.

And when the crap + condensate diluent reach the refinery it's all cracked together.

[westexas]

Rock,

I'm not saying that no one has shown an increase, but we also have lots of countries and regions with declining production, e.g. the North Sea, down by 2 mbpd from 2005 to 2012. In any case, let me put it this way:

The increase in Global C+C production from 2005 to 2012 was 2 mbpd--from 74 mbpd to 76 mbpd. If, for the sake of argument, global condensate production increased by 2 mbpd from 2005 to 2012, what would the increase in crude oil production have been?

Note that the EIA shows that global dry (processed) gas production increased by 22% from 2005 to 2012, while Global C+C production increased by 2.7%. And as noted above, OPEC showed no increase in crude oil production from 2005 to 2012 (rounding off to two significant figures). Whatcha think happened to global condensate production as global gas production increased by 22%?

The more I think about it, the more likely it seems to me that actual crude oil production in 2012 was less than actual crude oil production in 2005.

[dolanbaker]

Zap - "Can you answer a question about that? Is the heavy crude easier to move about when mixed with C, and is that why it is done?" Here's an indirect way to answer: are you aware that the millions of bbls of Canadian oil sands production has to be diluted about 30% with distillate so it can be pumped? Believe it or that's one of the problems exporting that crap: the need for condensate diluent. They are planning to build a pipeline to haul the condensate from the Gulf Coast to Alberta. One company is building the first diluent recovery faculty to pull the condensate out after they pipeline the crap from the fields to the border. From there the undiluted crap is hauled by heated tank cars or unheated ones that have to be heated once the peanut butter consistency crap gets to where it's going.

And when the crap + condensate diluent reach the refinery it's all cracked together.

Brings to mind an old phrase that lorry drivers used to say when they were driving unloaded; "I've got a load of Volkswagen radiators!". But of course they needed to bring back the empty trailers to get them reloaded.

[AndyA]

C&C is currently 2mbpd higher then 2005, I'd say it's unlikely that 2mbpd increase is all condensate. Or is all LTO classed as condensate?

Note that the EIA shows that global dry (processed) gas production increased by 22% from 2005 to 2012, while Global C+C production increased by 2.7%. And as noted above, OPEC showed no increase in crude oil production from 2005 to 2012 (rounding off to two significant figures). Whatcha think happened to global condensate production as global gas production increased by 22%?

Say the increase was 20tcf, and 17% of that was condensate. 3.4tcf of condensate /365..... gives me about 1.65mbboe/pd. So it is an interesting point, and plausible, though it looks to me like there has been a small increase in CO production as well. Very interesting. It sounds as though oil production is up because we include condensate, but when most of the gains are condensate and what we actually want is oil then really it's like getting a bigger bag of chips that still has the same amount of chips and more air. Though condensate is useful.

[Tanada]

C&C is currently 2mbpd higher then 2005, I'd say it's unlikely that 2mbpd increase is all condensate. Or is all LTO classed as condensate?

Note that the EIA shows that global dry (processed) gas production increased by 22% from 2005 to 2012, while Global C+C production increased by 2.7%. And as noted above, OPEC showed no increase in crude oil production from 2005 to 2012 (rounding off to two significant figures). Whatcha think happened to global condensate production as global gas production increased by 22%?

Say the increase was 20tcf, and 17% of that was condensate. 3.4tcf of condensate /365..... gives me about 1.65mbboe/pd. So it is an interesting point, and plausible, though it looks to me like there has been a small increase in CO production as well. Very interesting. It sounds as though oil production is up because we include condensate, but when most of the gains are condensate and what we actually want is oil then really it's like getting a bigger bag of chips that still has the same amount of chips and more air. Though condensate is useful.

I can't speak too much about North Dakota LTO, but in the eastern portion of Ohio they are fracking 'wet gas' wells as fast as they can. These wells produce a majority of natural gas, but mixed in is everything from Pentane on down in increasing quantities. Some of those wells are only 50% Methane with the rest being 'condensate'.
From
http://www.ohio.com/blogs/drilling/ohio ... e-1.453884

DENVER--(BUSINESS WIRE)--Dec. 19, 2013-- MarkWest Energy Partners, L.P. (NYSE: MWE) (“MarkWest”) and The Energy & Minerals Group (“EMG”), announced today the execution of definitive agreements with Gulfport Energy Corporation (NASDAQ: GPOR) (Gulfport) to provide stabilization services and potential gathering services for condensate produced within an area that includes Belmont, Harrison, Guernsey, Noble, and Monroe counties, Ohio. Gulfport is rapidly developing their acreage within the wet gas, retrograde condensate and oil windows of the emerging Utica Shale and currently has over 147,000 net acres under lease. In conjunction with these agreements, MarkWest and EMG will form Ohio Condensate Company, LLC, a new joint venture related to the development of industry-leading facilities and services to support the rapid growth of condensate production occurring in the liquids-rich areas of the Utica Shale. Discussions regarding the joint venture’s condensate solutions are also underway with numerous other Utica producers.

Initial infrastructure development will consist of a new condensate stabilization facility, with associated logistics and storage terminal capabilities to be constructed in Harrison County, Ohio and placed in service by the third quarter of 2014. The facility will have initial stabilization capacity of 23,000 barrels per day (Bbl/d) and an immediate 30,000 Bbl/d expansion is anticipated. The facility will be co-located and fully integrated with condensate storage, and a truck and rail loading terminal that will be constructed and operated by a subsidiary of Toledo, Ohio-based Midwest Terminals and will exclusively serve the joint venture. Raw condensate will be delivered by truck and stabilized at the facility. Once stabilized, the condensate will be transported by truck and rail to local refinery markets and Canadian export markets. In the future, a condensate gathering system and regional pipelines may be constructed to support additional deliveries to the facility. Furthermore, the facility will serve as the origin for MPLX LP’s (NYSE: MPLX) previously announced Cornerstone Pipeline, a condensate pipeline project that will terminate near Canton, OH and is scheduled to become operational by late 2016.

MarkWest and EMG are currently developing the largest fully integrated midstream solution in the Utica Shale, which includes hundreds of miles of gas and natural gas liquids gathering pipeline, up to three large-scale complexes totaling more than 1 billion cubic feet of processing capacity and 138,000 Bbl/d of ethane and heavier fractionation capacity.

“We are very excited to continue expanding our relationship with Gulfport Energy and provide a critical new service offering for the stabilization and marketing of condensate. Together with EMG, the formation of an integrated condensate solution is a significant milestone in our ongoing development of full-service midstream infrastructure in the Utica Shale and will provide producers with the ability to capture additional uplift from their growing liquids production,” stated Frank Semple, Chairman, President, and Chief Executive Officer of MarkWest. “We believe the increased use of condensate as a feedstock for refineries, and the growing demand from Canada for diluent, will support local, regional and international consumption of Utica condensate.”

MarkWest Energy Partners, L.P. is a master limited partnership engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids; and the gathering and transportation of crude oil. MarkWest has a leading presence in many unconventional gas plays including the Marcellus Shale, Utica Shale, Huron/Berea Shale, Haynesville Shale, Woodford Shale and Granite Wash formation.

So in short, yeah I think most of that increase could come from Condensate, Pennsylvania is producing a lot more than Ohio, the companies on the border between the states are just ramping up on this side of the border. The first fracked gas plays they started on five years ago were dry gas because gas was very expensive and it was easy money, but once the natural gas price collapsed the drillers turned to the wettest gas they could find because the condensate value is much higher than the dry gas value.

[ROCKMAN]

Andy - "I'd say it's unlikely that 2mbpd increase is all condensate. Or is all LTO classed as condensate?" First there is no such official classification as "LTO". That's just a made up concept. The are "tite" reservoirs that are conventional and unconventional in nature (IOW there is no conventional or unconventional "OIL"... just conventional and unconventional RESERVOIRS. There are "tite" reservoirs that produce NG, heavy and sour oil, sweet and high gravity oil as well as what many classified as condensate. I know it's handy for folks to use these types of short hand characterizations. But when technical questions are posed, such you have, it's difficult to provide a precise/correct answer.

And again condensate is oil. It's composition can contain a much smaller fraction of the more desirable hydrocarbon chains (such as gasoline) as some "oil". But some condensates can yield much more gasoline. I'm producing such a gas-condensate well in La and I'm getting paid a premium above what "oil" is being sold for in the same area. The general definition of condensate in the oil patch doesn't consider the composition of this liquid hydrocarbon. It's based upon the physical state of it in the reservoir. IOW oil that exists in a vapor state in the reservoir at those high temperatures and pressures will "condense" to a liquid phase when it reaches the surface at lower pressure and temp. Thus the term "condensate". Same phenomenon you see when water vapor condenses on your window. And it gets more complicated when the reservoir pressure drops below the "bubble point"... when the vapor phase begins to condense to a liquid phase while still in the reservoir. In Texas a well may have it's liquid hydrocarbon production classified as "condensate" early on but after the bubble point is reached all future production is classified as "oil". And this isn't some trivial technical point. It has huge financial implications with respect to well spacing: "oil" wells can be drilled on much closer spacing then "gas-condensate wells. And that can have a huge impact on a royalty owner's income. These can turn into complex lawsuits. And more confusion: a condensate classified well in La can be classified as an oil well in Texas even if both liquids have identical compositions. State laws determine if it's called oil or condensate. And those are the numbers collected by the EIA and others. So think about this the next time you see a "condensate" number: what exactly are they talking about: the composition of the liquid or the nature of the reservoir from which it was produced? Is "condensate" as reported by a Persian Gulf producer is the same stuff as the condensate production reported by Norway? Or would some of the Norwegian "oil" be reported as "condensate" if it were produced in Texas?

Clear as mud now, eh? LOL.

[ROCKMAN]

And wt: I was responding to the supposition that nearly all the oil production increase in recent years was from unconventional reservoirs. Given the billions of bbls of oil in conventional reservoirs discovered since 2005 that's something of an overstatement, wouldn't you agree? As I pointed out just consider the oil developed off the coast of Angola alone.

[westexas]

We could just go with what RBN Energy calls the "Official definition" of condensate, i.e., 45 or greater API gravity:

Neither Fish nor Fowl – Condensates Muscle in on NGL and Crude Markets (February, 2012)
https://rbnenergy.com/Neither-Fish-nor-Fowl-Condensates-Muscle-in-on-NGL-and-Crude

Crude oil production in the Eagle Ford has ramped up from less than 50 Mb/d two years ago to almost 400 Mb/d today, and the growth shows no sign of slowing down.  In most reports and statistics, all of this volume shows up as crude oil.  But it’s not.  Between 60%-70% of this production is condensate – a hydrocarbon classification that is somewhere between crude oil and natural gas liquids.  It is valued differently from crude, can require handling different from crude, and can go into markets different from crude.  But neither is it a natural gas liquid.  Condensates are produced in the field, not extracted from a wet gas stream by a cryogenic processing unit.  Condensates are neither fish nor fowl. 

The growth in condensate volume is not unique to the Eagle Ford.  From the Granite Wash to the Bakken, they are becoming a much more important factor in the liquid hydrocarbons market.   They are already a bigger deal than you might expect.  Condensates make up about 11% of what is generally referenced as “crude oil” in the global petroleum market.

You can get a lot of definitions for condensates.  Schlumberger has the following description on their website:  “A low-density, high-API gravity liquid hydrocarbon phase that generally occurs in association with natural gas. Its presence as a liquid phase depends on temperature and pressure conditions in the reservoir allowing condensation of liquid from vapor.”  Let’s translate that.  Condensates generally come along with natural gas.  They can be either a liquid or a gas depending on temperature and pressure.  Generally field production moves through separators and stabilizers that allow condensates to ‘fall out’ of the gas at something around ambient temperatures and pressures.   In addition, condensates are produced out of the well in liquid phase.

The liquid condensate is a very light hydrocarbon, somewhere between 45 and 75 API gravity.  (WTI is about 39 API, Brent 35 API, motor gasoline mid-50’s API.)  The official delineation between a condensate and a crude oil is 45 API.  So this stuff is a highly volatile mixture of natural gas liquids (very high API numbers), naphtha range materials (like gasoline) and a variety of other cats and dogs.    You can run your tractor on a very clean condensate.

Note the that condensate accounted (RBN Energy estimate) for about 11% of global crude oil production, circa 2011. I assume that this ratio increased from 2005 to 2012, but I can't use an assumption to prove a conclusion, so let's approach it this way.

11% of 74 mbpd would be about 8 mbpd. Dry (processed) global gas production was 268 BCF/day in 2005 (EIA) and 328 BCF/day in 2012. In terms of condensate production per BCF/day of gas in 2005 we were looking at 30,000 bpd per BCF of dry gas production. If we apply that same ratio to 2012 dry gas production, estimated condensate production would be 9.8 mbpd in 2012, versus about 8.0 mbpd in 2005, a difference of 1.8 mbpd.

Given a 22% increase in global gas production, and given the heavy emphasis on liquids rich gas plays in the US and globally, I don't see how increased condensate production would not account for all, or more than all, of the increase in global Crude + Condensate production from 2005 to 2012.

In any case, it's pretty interesting that one gets pretty much the same results using two different approaches: (1) Assuming that OPEC crude oil only production is a good representative sampling of global crude oil only production and (2) Using the above referenced estimate of condensate production per BCF of dry gas production to estimate 2005 and 2012 global condensate production.

Incidentally, when one asks what the price of oil is, you generally don't get the quoted price for condensate or propane, you get the crude oil price. It's as if you ask a butcher what the price of beef is, and he gives you the price for steak, but if you ask him how much beef he has on hand, he gives you total pounds of steak, roast and ground beef.

[westexas]

Rock,

My definition for "Unconventional Oil" is a little different from most people's. My definition is that if you have to use heat, e.g., hot water, steam, fire-floods, etc., to get the oil out, it's unconventional. If you don't have to use heat, it's conventional.

[ROCKMAN]

wt - "I don't see how increased condensate production would not account for all, or more than all, of the increase in global Crude + Condensate production from 2005 to 2012." So you count all the new production developed in the DW GOM, offshore west Africa, Iraq, the Permian Basin, the Canadian oil sands, the Bakken (Bakken crude oil gravity ranges from 36 to 44 degrees API...not condensate according to RBN) , etc. since 2005 as condensate or are you taking the position that the reports from those regions were lies?

Inquiring minds would like to know. LOL.

[ROCKMAN]

Wt - So you would classify all the Eagle Ford oil as conventional production? You're option, of course. But I suspect that would make you an "Army of One" on this site. LOL. BTW I get that point and don't completely disagree with the logic behind it. Again this is the continuous problem we have here: the distinction between the chemical character of the liquid hydrocarbon, the nature of the recover method and the character of the reservoir. And let's be honest: you and I know exactly what we mean by tite" rocks...you and I have dealt with "tite" rocks that weren't fractured shales. Many here don't. And while it's nice that RBN wants to define what "condensate" is I don't recall any of the bodies that report their production have agreed to use that definition. The Texas Rail Road Commission certainly hasn't changed their protocol.

[Pops]

The EIA says:
Conventional oil and natural gas production: Crude oil and natural gas that is produced by a well drilled into a geologic formation in which the reservoir and fluid characteristics permit the oil and natural gas to readily flow to the wellbore.

So not fracked, not mined, not grown on a stalk, LOL.