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Page added on February 26, 2015

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Platts Light Houston Sweet Crude

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Much has been made of the domestic light sweet crude flooding US markets, and we attempted to capture some key points about some of that oil in this infographic centered on one Platts key price assessments: Light Houston Sweet. For a limited time, we’ll be sharing weekly LHS wraps in the Light Houston Sweet Analysis feature, and we’re also sharing the daily price assessment of Light Houston Sweet and how much it rose/fell on Twitter with the hashtag #PlattsLHS. Click on the infographic to see a larger version.

Light Houston Sweet



21 Comments on "Platts Light Houston Sweet Crude"

  1. Plantagenet on Fri, 27th Feb 2015 11:18 am 

    Light Houston Sweet is shale oil from the Permian Basin. Plants is proposing it as a new oil pricing standard comparable to WTI oil and Brent oil.

    Notice that the price of LHS tracks right along with WTI.

    The claims by some at this site that shale oil is much less valuable then other oil because it is lighter are clearly wrong. The price of LHS per bbl is essentially identical to WTI.

  2. Plantagenet on Fri, 27th Feb 2015 11:19 am 

    typo: Platts not Plants.

    Ha ha

    Cheers!

  3. dave thompson on Fri, 27th Feb 2015 1:17 pm 

    Hey Plant,Look at the chemical make up of WTI next to LTO and get back to me on how much it does not matter.

  4. Plantagenet on Fri, 27th Feb 2015 2:08 pm 

    Hey Dave,Look at the price of WTI next to LHS and get to me on how LTO isn’t as valuable as WTI.

  5. shortonoil on Fri, 27th Feb 2015 4:24 pm 

    Hey Plant,Look at the chemical make up of WTI next to LTO and get back to me on how much it does not matter.

    Anything over an API of 50 is strictly feedstock material, and that market is saturated. The only market for US producers, outside of Canada as a diluent for bitumen, is completely blocked. US LTO can not compete with the big, high permeability condensate fields like Qatar, or Russia. Production is still rising because wells drilled outpaced wells completed, and to avoid immediate bankruptcy these firms are now completing those wells. It is quit likely that the banking industry is backstopping these producers for as long as possible. Once this blows up they will be sitting with $1 trillion in unfunded liabilities. But, storage is growing short, and the producers are losing a bundle on every barrel. It won’t be long before the money starts running out. We can expect to start seeing fireworks by June.

  6. dave thompson on Fri, 27th Feb 2015 5:04 pm 

    Ok plant you got me energy comes from money. All we have to do is print money and presto we have energy. It does not matter if it comes from corn or the middle east. Tar sands or WTI. It is all the same energy. AND money is all you need for energy to appear.

  7. Plantagenet on Fri, 27th Feb 2015 5:12 pm 

    @dave.

    Your claim that energy comes from money is silly. Please review a basic thermodynamics text

    @short

    You are right that the market for LHS is saturated. In fact the market for all kinds of oil is saturated. We’re in an oil glut……remember?

  8. dave thompson on Fri, 27th Feb 2015 5:20 pm 

    “The claims by some at this site that shale oil is much less valuable then other oil because it is lighter are clearly wrong. The price of LHS per bbl is essentially identical to WTI.” Your claim Plant. All it takes is money for energy is your claim. You said it you own it.

  9. Davy on Fri, 27th Feb 2015 5:52 pm 

    Planter so are you saying energy and money have no correlation? Planter that is silly

    Cheerios

  10. Plantagenet on Fri, 27th Feb 2015 7:44 pm 

    @Dave

    My point is that WTI and LHS are about the same price. Thats just a fact. Thats reality.

    Somehow you’ve jumped to a completely different claim that energy comes from money —and you said that in those exact words, not me.

    Back here in the real world energy comes from OIL, not money. They are two different things.

    Get it now?

    Cheers!

    @Daver

    I’m not sure what you mean by a “correlation” between energy and money. The price of oil changes daily—run the statistics and at best there would be a weak “correlation” between oil and money because the same amount of money buys wildly different amounts of oil at different times.

    Right?

    Cheers!

  11. Plantagenet on Fri, 27th Feb 2015 8:19 pm 

    The same amount of oil will always release the same amount of energy.

    But because the price of oil is variable, different amounts of money are needed to buy oil at different times.

    So there is an EXCELLENT correlation between oil and energy, but not between money and energy.

    Get it now?

    CHEERS!

  12. GregT on Fri, 27th Feb 2015 8:35 pm 

    “Get it now?”

    Once again, obviously you don’t, Plant.

  13. Ted Wilson on Fri, 27th Feb 2015 8:50 pm 

    http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/Light-Houston-Sweet-WP.pdf

    As per this document LHS will be between 37 and 42 API and has a supply of 2 million b/d where as WTI is fixed @ 38 API.

    If the quality of crude changes from Permian & Eagle Ford, then this benchmark will start shaking. But its interesting that a new benchmark for shale has been started. Let the market know that fracking has entered mainstream.

  14. Northwest Resident on Fri, 27th Feb 2015 9:07 pm 

    The self-proclaimed oil expert says “The same amount of oil will always release the same amount of energy.”

    I’m confident that the glutster meant to say “The same amount of oil with the same exact chemical properties will always release the same amount of energy.”

    The reason I’m confident that’s what the glutster really meant to say is because otherwise he would prove himself to be completely ignorant of the many different variations of oil, despite having been on this forum and supposedly reading all the many articles and posts that explain exactly how different one barrel of oil can be from the other.

    But then, admitting that, the glutster would undermine his original point that LHS is worth as much as WTI, despite proven inequalities. Which is probably why he actually did mean to say that any amount of oil will always release the same amount of energy as any other amount of oil, which is just plain ignorant.

  15. Davy on Sat, 28th Feb 2015 7:08 am 

    Thanks, NR, I was going to open up on Planter but you saved me the time.

    Planter it takes money to make money, right? Yes. The same is true of oil. It takes money to make oil. If you listen at all to short it takes oil to make oil. Planter I am saying the real value of oil to our system is in that equation. The more or less of it is the key.

    Planter can you step up to that level from your Wall Street pseudoscience level? You do realize there is a difference between the two don’t you? One digital and abstract and one physical and real.

    Planter, Got it?

    Cheerios

  16. rockman on Sat, 28th Feb 2015 8:14 am 

    Ted – “As per this document LHS will be between 37 and 42 API and has a supply of 2 million b/d where as WTI is fixed @ 38 API.” For those not familiar most of the WTI oil isn’t sold at that exact price. Same for all benchmark prices. I sell oil based upon a formula that has various adds and deducts. IOW I’ll sell 23 API oil based upon the WTI benchmark with those adjustments which includes an API gravity adjustment.

  17. rockman on Sat, 28th Feb 2015 8:32 am 

    FYI – I’ll repeat in case folks would like to back up their positions with facts:

    The condensates sell at a SMALL discount to heavier crudes but they do yield a good bit of gasoline and more then they yield diesel which is the real value globally of the heavy crudes.

    Here’s some facts from http://allenergyconsulting.com/blog/2014/07/15/condensate-economics-explained/

    “Running OMA refining model for the USGC Light Louisiana Sweet (LLS), Maya (Mexico Heavy Crude Oil), and Eagle Ford Condensate shows the following result in each configuration using the average USGC 2013 prices for Gasoline, iso & normal Butane, Jet, Propane, Diesel, Naphtha, Residual Fuel Oil, and Petroleum Coke. The value is essentially the revenue minus the variable cost obtain per barrel of feedstock. If LLS was processed in a cracking refinery, in the USGC they could expect $115/bbl of revenue per barrel. LLS averaged $106/bbl in 2013 – therefore a USGC refiner running LLS should have produced a margin of $9/bbl. This is not weighted nor optimized. An optimized refiner should have been able to extract more margin through better inventory management, purchasing, and offering a broader product suite.”

    If you take the time to look at their chart you’ll see that the value to refiners of EFS condensate is just slightly less then that of sweet crude.

    IOW the refiners (including the Canadians), though it costs more to do so, are making a sh*t load of motor fuels from the condensates.

    The critical issue IMHO with EFS condensate isn’t it’s yield or what it sells for: it’s the cost to develop that production.

  18. Plantagenet on Sat, 28th Feb 2015 9:27 am 

    Rockman is 100% correct that LHS and other LTO are priced almost identically to WTI oil, ie it is equally valuable

    Cheers!

  19. dave thompson on Sat, 28th Feb 2015 9:45 am 

    Rockman said “The critical issue IMHO with EFS condensate isn’t it’s yield or what it sells for: it’s the cost to develop that production.” Plant claims LHS and LTO “is equally valuable”. More money for nothing?

  20. Davy on Sat, 28th Feb 2015 9:47 am 

    Planter, did you conveniently forget to read this part of the Rock’s comment?:

    “The critical issue IMHO with EFS condensate isn’t its yield or what it sells for: it’s the cost to develop that production.”

    This is where the idea of it takes money to produce energy and by extension it takes energy to produce energy and by extension not all supplies of oil are the same. By this virtue can you relate? I am willing to accept your version at a market level but at a systematic level of the oil complex and the economy can you except the alternative? This is where the demand destruction glut thoughts also enter.

    Cheerios

  21. rockman on Sat, 28th Feb 2015 7:46 pm 

    D&D – Exactly. There’s the price of a distillate and then there’s it “value”. Value being the net profit made producing it. Obviously two very different metrics.

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