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Page added on May 16, 2019

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Surge of New Permian Basin Oil to Feed Global Supply

Production

Exports of the Permian Basin’s newest kind of oil are set to jump as production surges, exceeding the appetite of U.S. refiners.

Sales of the new grade, known as West Texas Light, began in September, as explorers sought to separate out increasingly lighter and less sulfurous crude bubbling up from wells in West Texas and New Mexico, so it wouldn’t lessen the quality of U.S. benchmark West Texas Intermediate. WTL supply has grown to over 500,000 barrels a day, a nearly four-fold rise from last year.

While some of that is staying close by, most will need to be exported. Even as ample shale barrels and tighter supplies of heavier crudes have encouraged U.S. refiners to process the lightest oil since 1990, that may reach a limit soon. But since many of the biggest refineries have invested billions of dollars in upgrades over the years and are set up to run the heaviest, dirtiest oil, there’s only a certain amount of light oil they can handle.

Growing Exports

Shipments of American oil to overseas buyers have been on an uptrend

Census Bureau

“I suspect that refineries that can blend to run lighter slates are likely already doing so to the best they can,” said Michael Tran, a commodity strategist at RBC Capital Markets LLC in New York. “Every incremental barrel produced in the U.S. should be earmarked for export,” unless it’s a heavy crude, Tran said.

Shipments overseas began in February and have neared 1.42 million barrels through this month. Most was sent to the Netherlands and the rest for Canada, while none has headed to Asia so far, according to U.S. Customs data and ship tracking data compiled by Bloomberg.

Renewed U.S.-led sanctions on Iran could provide an opportunity. Buyers of Iranian condensates such as South Korea, might consider WTL, Jonathan Aronson, analyst for Cornerstone Marcro LLC in New York.

Presently, some 1 million barrels of storage has been set aside in the Permian and Cushing, Oklahoma, to market WTL, according to people familiar with the matter. Some pipes are starting to accept it as a proper grade, the people said.

More Pipelines

Still, more pipeline capacity would be needed, which is expected to start coming online late this year and in 2020. “Pipelines from Midland and Cushing to the Gulf Coast are full right now. It’s a problem for any crude, including WTL,” Aronson said.

WTL is being marketed to Asian buyers for refining and petrochemical use, according to a report by analysts at Macquarie Capital (USA) Inc. Even with its higher content of light products such as naphtha, it would be globally marketable for at least three years. However, that could change later on because of rapidly growing natural gas liquids and condensates supply, both of which have similar yields.

That might be a boon for buyers, as WTL prices could drop, particularly in Asia, which has numerous other options for light, low-sulfur crudes. Currently, the grade is trading at $1 to $1.50 a barrel under WTI Midland, compared with a $2.50 discount last month, according to people familiar with the matter.

On the whole, WTL would be a great crude for a simple refinery to run and chemical plants would like it, whether in Asia or Europe, Cornerstone’s Aronson said.

bloomberg



106 Comments on "Surge of New Permian Basin Oil to Feed Global Supply"

  1. Cloggie on Mon, 20th May 2019 6:38 am 

    More stupidity from cloggo about a stupid person. Hollywood people are the lowest of lowlifes in this screwed up world.

    Perhaps, but Hollywood is a tool in the hands of those that lord over you. So, if they are the “lowest of lowlifes”, what says that about you?

    IMA, you are cutting down one of the few countries where a significant Dutch settlement should have made a difference but didn’t.

    Actually we did in a time we still mattered:

    https://news.wisc.edu/was-declaration-of-independence-inspired-by-dutch/

    Without French and Dutch you would not have achieved independence from the British:

    https://deepresource.wordpress.com/2014/11/25/the-second-american-revolution/

    But after that you were on your own, that’s the whole idea of independence. In fact the current ruination of America was enabled by the influx of Eastern Europeans, people like you, without which the displacement of the NW-European WASPs by the koshers, would not have happened.

    I know you will blame it on the blacks. Can’t admit anything wrong with the whites.

    I’m too Nietzschean amoral to be concerned with blaming. Survival and thriving is the name of the Darwinian game.

  2. Davy on Mon, 20th May 2019 6:48 am 

    “Perhaps, but Hollywood is a tool in the hands of those that lord over you. So, if they are the “lowest of lowlifes”, what says that about you?”
    Who lords over me cloggo? LMFAO. Yea, I despise the Jewish influence in media and Hollywood but they don’t lord over much.

    “But after that you were on your own, that’s the whole idea of independence. In fact the current ruination of America was enabled by the influx of Eastern Europeans, people like you, without which the displacement of the NW-European WASPs by the koshers, would not have happened.”
    Did my DNA cloggo and you know that I am mostly Dutch and German. My dad thought we were more Moravian than we are. I am even less eastern European. You just distort shit because that is what you do. You are basically a cherry picking, revising, and embellishing LIAR. You are Dutch scum. My best friend is Dutch so I have a high regard for the country. You are an example of the worst that is Dutch

    “I’m too Nietzschean amoral to be concerned with blaming. Survival and thriving is the name of the Darwinian game.”
    If you are basing your life on Darwinian shit then you are behind the times.

  3. Cloggie on Mon, 20th May 2019 7:30 am 

    While we leave Davy dream of his Dutch genes, back to politics:

    https://www.independent.co.uk/voices/letters/boris-johnson-scotland-independence-yes-leave-uk-a8919966.html

    “If Boris Johnson becomes prime minister, Scotland will vote to leave the UK”

    I’m British (of English birth, Northern Irish and Scottish ancestry) and have no desire to see the UK broken up. But the case for Scottish independence is being transformed by the Brexit debacle. Many people like me, in favour of decentralisation of power but reluctant to see a new border created, will be forced towards the SNP once Boris Johnson or some other Brexiteer Tory replaces Theresa May.

    https://www.independent.co.uk/news/uk/politics/tory-party-split-boris-johnson-leadership-brexit-no-deal-theresa-may-a8919366.html

    “Tory party will split if Boris Johnson becomes leader and pursues no-deal Brexit, warn MPs”

    https://www.independent.co.uk/news/uk/politics/brexit-news-today-live-theresa-may-deal-vote-eu-election-polls-a8921451.html

    “Brexit news – live: Theresa May launches last-ditch bid to pass deal, as rivals compete for publicity in race to replace her”

    EU rules out renegotiation Brexit package. It is this or no-deal.

  4. Davy on Mon, 20th May 2019 8:36 am 

    More brexit spam from Cloggo. Cloggo, how about giving us a brexit update when ithe news is worthwhile. We can access the news for minor events.

  5. I AM THE MOB on Mon, 20th May 2019 10:36 am 

    On Puerto Rico’s ‘Forgotten Island,’ Tesla’s Busted Solar Panels Tell A Cautionary Tale

    Workers from Tesla, billionaire Elon Musk’s electric car and solar energy giant, arrived on Vieques just weeks after hurricanes Irma and María crippled the aging electrical grid and severed the transmission cable that connected this island to the Puerto Rico mainland seven miles west. The company selected the senior center as one of 11 sites on the darkened island that it would equip with power-producing panels and batteries.

    Constructing the system was simple. But when workers attached the panels and batteries to the old electrical wiring in the former schoolhouse, the batteries blew out.

    “It doesn’t work,” a nurse at the senior center said in Spanish during a HuffPost visit in late February. “It never has.”

    https://www.huffpost.com/entry/elon-musk-tesla-puerto-rico-renewable-energy_n_5ca51e99e4b082d775dfec35?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup%3A%20Utility%20Dive%2005-18-2019&utm_term=Utility%20Dive%20Weekender&guccounter=1&fbclid=IwAR0qJPQAhfN2Su5gtus58V4cSa46eM0D1Hpz6HxmdhPK5fCq3cfWvpOal94

    Another epic fail by renewable’s..LOL

  6. Shiner on Wed, 22nd May 2019 10:38 am 

    There is only failure, that is the point. Renewables cannot save you but they can bury you a little bit deeper.

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