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Page added on February 15, 2016
Estimates Of Post-2005 US, OPEC & Global Condensate Production Vs. Actual Crude Oil Production
After examining available regional and global production data (using EIA, OPEC and BP data sources), in my opinion actual global crude oil production – generally defined as 45 API Gravity or lower crude oil – has probably been on an “Undulating Plateau” since 2005. At the same time, global natural gas production and associated liquids, condensate and natural gas liquids (NGL), have so far continued to increase.
Schlumberger defines condensate as: “A low-density, high-API gravity liquid hydrocarbon phase that generally occurs in association with natural gas.” The most common dividing line between crude oil and condensate is 45 API Gravity, but note that the upper limit for WTI crude oil is 42 API Gravity. However, the critical point is that condensate is a byproduct of natural gas production. Note that what the EIA calls “Crude oil” is actually Crude + Condensate (C+C).
When we ask for the price of oil, we generally get the price of either WTI or Brent crude oil, which both have average API gravities in the high 30’s, and the maximum upper limit for WTI crude oil is 42 API Gravity. However, when we ask for the volume of oil, we get some combination of crude oil + partial substitutes, i.e., condensate, NGL and biofuels.
From 2002 to 2005, as annual Brent crude oil prices approximately doubled from $25 in 2002 to $55 in 2005, global natural gas production, global NGL production and global C+C production all showed similar rates of increase. For example, from 2002 to 2005 global natural gas production increased at a rate of 3.2%/year, as global C+C production increased at a rate of 3.3%/year.
From 2005 to the 2011 to 2013 time frame, annual Brent crude oil prices doubled again, from $55 in 2005 to an average of $110 for 2011 to 2013 inclusive, remaining at $99 in 2014. From 2005 to 2014, global natural gas production increased at 2.4%/year, while global C+C production increased at only 0.6%/year. Given that condensate production is a byproduct of natural gas production, the only reasonable conclusion in my opinion is that increasing global condensate production accounted for all, or virtually all, of the post-2005 slow rate of increase in global C+C production, but let’s examine the available data.
US & OPEC Condensate Versus Crude Oil Production Estimates
We appear to have three sources of condensate versus crude oil data:
- The Texas RRC data base (for Texas production)
- EIA estimates of US C+C production by API Gravity
- Implied OPEC Condensate Production (EIA OPEC C+C production less the 12 country OPEC crude only production).
Obviously, data quality is an issue, and the boundary between actual crude and condensate is sometimes fuzzy. In any case, we have to deal with the data that we have.
Regarding US data, the EIA estimates that US 45+ API Gravity C+C production increased by about one million bpd from 2011 to 2014, and the EIA estimates that US Lower 48 C+C production in excess of 45 API Gravity was two million bpd in 2015. Based on these estimates, I estimate that US 45+ API Gravity C+C production increased from about 0.5 million bpd in 2005 to about 1.7 million bpd in 2014, an increase of 1.2 million bpd.
US natural gas production increased from 50 BCF/day in 2005 to 71 BCF/day in 2014. Based on the foregoing, US condensate production per BCF of dry gas production increased from 10,000 barrels per BCF of dry gas in 2005 to 24,000 barrels per BCF of dry gas production in 2014.
Incidentally, based on the EIA analysis, it appears that about 40% of US Lower 48 C+C production in 2015 exceeded the maximum API Gravity for WTI crude oil, 42 API Gravity.
Based on OPEC and EIA data, Implied OPEC Condensate Production increased from about 1.2 million bpd in 2005 to about 2.4 million bpd in 2014, an increase of 1.2 million bpd.
OPEC natural gas production increased from 42 BCF/day in 2005 to 68 BCF/day in 2014. Based on the foregoing, OPEC condensate production per BCF of dry gas production increased from 29,000 barrels per BCF of dry gas in 2005 to 35,000 barrels per BCF of dry gas production in 2014.
If we combine the two condensate estimates (US + OPEC), their combined estimated condensate production rose from 1.7 million bpd in 2005 to 4.1 million bpd in 2014, an increase of 2.4 million bpd. Combined condensate production per BCF of gas rose from 18,000 barrels per BCF of dry gas in 2005 to 29,000 barrels per BCF of dry gas in 2014.
The following is a summary of the foregoing data:
Natural Gas Production Data
US Natural Gas Production (BP):
- 2005: 50 BCF/day
- 2014: 71 BCF/day
OPEC 12 Natural Gas Production (BP):
- 2005: 42 BCF/day
- 2014: 68 BCF/day
US + OPEC 12 Natural Gas Production (BP):
- 2005: 92 BCF/day
- 2014: 139 BCFday
Condensate Data & Estimates
Implied OPEC 12 Condensate Production: (EIA OPEC 12 C+C less OPEC Crude Only)
- 2005: 1.2 million bpd
- 2014: 2.4 million bpd
Estimated US Condensate Production (45+ API Gravity C+C Production):
- 2005: 0.5 million bpd
- 2014: 1.7 million bpd
(EIA puts US Lower 48 45+ API C+C production at 2 million bpd in 2015, and they estimated that US 45+ API Gravity C+C production increased by about one million bpd from 2011 to 2014.)
Implied OPEC 12 Condensate + Estimated US Condensate Production:
- 2005: 1.7 million bpd
- 2014: 4.1 million bpd
OPEC 12 + US Condensate Estimates Per BCF of Dry Gas Production:
- 2005: 18,000 barrels/BCF
- 2014: 29,000 barrels/BCF
(In terms of gallons of condensate per MCF of dry gas, the condensate yield would be 0.8 gallons/MCF in 2005, rising to 1.2 gallons per MCF in 2014, if my math is correct.)
Global Condensate Versus Crude Oil Production Estimates
Global dry natural gas production rose from 270 BCF/day in 2005 to 335 BCF/day in 2014. In 2014, combined US + OPEC gas production accounted for 41% of global gas production in 2014.
If the US + OPEC condensate production estimates per BCF of dry gas production are similar to global values, it implies that global condensate production rose from about about 5 million bpd in 2005 to about 10 million bpd in 2014, an increase of about 5 million bpd. Note that global C+C production increased from 74 million bpd in 2005 to 78 million bpd in 2014, an increase of 4 million bpd.
Of course, the foregoing implies that actual global crude oil production (45 API Gravity and lower crude oil) declined from about 69 million bpd in 2005 to about 68 million bpd in 2014, as annual Brent crude oil prices doubled from $55 in 2005 to $110 for 2011 to 2013 inclusive (remaining at $99 in 2014).
Note that the global oil and gas industry spent trillions of dollars on global upstream capex after 2005, for 2006 to 2014 inclusive (on both oil and gas projects). But if it took trillions of dollars to keep us on a post-2005 “Undulating plateau” in actual global crude oil production, what happens to global crude oil production given the large and ongoing cutbacks in global upstream capex?
What’s Actually in Those Storage Tanks?
We have seen a large year over year increase in US and global Crude + Condensate (C+C) inventories. For example, EIA data show that US C+C inventories increased by 100 million barrels from late 2014 to late 2015, and this inventory build has contributed significantly to the sharp decline in oil prices.
The question is, what percentage of the increase in US and global C+C inventories consists of condensate?
Four week running average data showed that US net crude oil imports for the last four weeks of December increased from 6.9 million bpd in 2014 to 7.3 million bpd in 2015. Why would US refiners continue to import large–and increasing–volumes of actual crude oil, if they didn’t have to, even as we saw a huge build in US C+C inventories? And again, what the EIA calls “Crude oil” is actually C+C. And as noted above, based on the EIA analysis it appears that about 40% of US Lower 48 C+C production in 2015 exceeded the maximum API Gravity for WTI crude oil, 42 API Gravity.
The most recent four week running average EIA data shows US net crude oil imports remained at 7.3 million bpd, with net total liquids imports at 5.5 million bpd, up 17% from the 2015 average annual value of 4.7 million bpd.
I frequently cite a 2015 Reuters article that discussed case histories of refiners increasingly rejecting blends of heavy crude and condensate that technically meet the upper limit for WTI crude (42 API gravity), but that are deficient in distillates. Of course, what the refiners are rejecting is the condensate component, i.e., they are in effect saying that “We don’t want any more stinkin’ condensate.” Following is an excerpt from the article:
U.S. refiners turn to tanker trucks to avoid ‘dumbbell’ crudes (March, 2015)
In a pressing quest to secure the best possible crude, U.S. refiners are increasingly going straight to the source.
Firms such as Marathon Petroleum Corp and Delek U.S. Holdings are buying up tanker trucks and extending local pipeline networks in order to get more oil directly from the wellhead, seeking to cut back on blended crude cocktails they say can leave a foul aftertaste. . . .
Many executives say that the crude oil blends being created in Cushing are often substandard approximations of West Texas Intermediate (WTI), the longstanding U.S. benchmark familiar to, and favored by, many refiners in the region.
Typical light-sweet WTI crude has an API gravity of about 38 to 40. Condensate, or super-light crude that is abundant in most U.S. shale patches, ranges from 45 to 60 or higher. Western Canadian Select, itself a blend, is about 20.
While the blends of these crudes may technically meet the API gravity ceiling of 42 at Cushing, industry players say the mixes can be inconsistent in makeup and generate less income because the most desirable stuff is often missing.
My premise is that US (and perhaps global) refiners hit – late in 2014 – the upper limit of the volume of condensate that they could process if they wanted to maintain their distillate and heavier output. This resulted in a build in condensate inventories, reflected as a year over year build of 100 million barrels in US C+C inventories.
Therefore, in my opinion the US and (and perhaps global) C+C inventory data are fundamentally flawed when it comes to actual crude oil inventory data. Note that according to Iranian sources, the bulk of their floating offshore storage consists of condensate, which they were permitted to export under the sanctions. In my opinion, this suggests that we may be seeing both a US and a global glut of condensate in storage.
In any case, here is the critical point: If it took trillions of dollars to keep us on a post-2005 “Undulating plateau” in actual global crude oil production, what happens to global crude oil production given the large and ongoing cutbacks in global upstream capex?
30 Comments on "Estimates Of Post-2005 US, OPEC & Global Condensate Production Vs. Actual Crude Oil Production"
twocats on Mon, 15th Feb 2016 10:17 am
It’s a little ironic that the pretty much the ONLY data point the PO-deniers (and board comic-relief) can point to is “total liquids”. But everything around that one data point is playing like the Peak Oil Symphony Orchestra. The economy is/has been in tatters. The global monetary regime is/has been in full-blown panic mode. Marginal societies are unraveling first (Greece, Syria). Energy companies spent themselves into oblivion looking for the last scraps. Wealth inequality puts us in/on the verge of a neo-feudal society (rentier class). and the Orchestra plays on with ever-increasing intensity.
onlooker on Mon, 15th Feb 2016 10:30 am
“Brown believes that worldwide production of condensate “accounts for virtually all of the post-2005 increase in C+C [crude plus condensate] production.” What this implies is that almost all of the 4 million-barrel-per-day increase in world “oil” production from 2005 through 2014 may actually be lease condensate.” This is taken from an article about the Great Condensate Con. In which it is explained that condensate accounts for increases in total liquids and condensates are NOT really crude oil and thus less valuable to refiners and ultimately consumers. So there you have it all this “glut” has been a big CON. Here is link to article -http://www.resilience.org/stories/2016-01-17/the-great-condensate-con-is-the-oil-glut-just-about-oil
Nony on Mon, 15th Feb 2016 11:01 am
1. Plenty of people define condensate above 50.
“The API gravity of condensate is typically 50 degrees to 120 degrees.”
-Shlumberger, http://www.glossary.oilfield.slb.com/Terms/c/condensate.aspx
2. The boundary whether 45 or 50 is artificial. The substance is a hydrocarbon liquid, composed of a mixture of thousands of molecules. The bugs that died to make that oil and the geology that existed to create it, don’t care what you define as condensate or crude.
2.5. Lease condensate is removed at the wellhead from a 3 ph separator in the same manner that sub 45 oil is removed. The only difference in calling it one or the other is based on legalistic definitions of what you call a gas well or an oil well. But the fact is these products are found together and extracted similarly and separated routinely. It is even technically possible to have 44 API “lease condensate” and 47 API “oil”. [Although typically lease condensates are 50+.]
2.6 Plant condensate is another animal, coming out further downstream (requiring a gas sep plant) and having generally higher API. Often around 60+ and with minimal C8+ hydrocarbons.
2.7. In any case, both lease and plant condensate are, similarly to “oil” liquid hydrocarbons at STP, with a mixture of molecules. This is fundamentally different than NGLs like ethane, propane, butane and isobutane, which are GASSES at STP and are purity products. (And even here, the C2, and C4s have petrochemical or gasoline blending uses…”oil markets”. Propane is more like methane…heating market. But in any case, condensates are very different from NGLs.)
2.8. Lease condensate and “oil” are both sold in the same manner to same customers by Plains, Flint, etc. distributors. The market considers them different flavors of ice cream, not steak versus veggies.
2.9. The US export restrictions law considered lease condensate to be crude oil.
2.95. The EIA (which has paid experts, people who have worked in O&G for years, knows a lot more than some peaker on the Internet) classifies crude and condensate together.
3. 42 API WTI (or Bakken) and 47 API EF crude liquid are MUCH more alike than a 42 API WTI and a 17 API Bakersfield crude.
4. As usual, Brown ignores the low sulfur content of high API oil. [And lower metals. And lower asphaltics.]
5. Many condensates compete well (similar or better price) versus heavy crudes.
6. In Asia, 50 API oil still fetches a premium over 42 API. A decade ago, this was true in the US as well. It is only recently that it does not (because of our glut of condensate and our complex [read work on lower API] refineries.
7. Condensate goes through a distillation tower, just like WTI. It needs to be refined to make useful products. In the US, most refineries prefer about a 28 API blend (based on installed equipment as well as the remaining discount of medium crude versus WTI.) They achieve this, often, by mixing light with heavy. Condensate works here too, just like WTI.
8. If the glut of condensate is not relevant, then why has the price of WTI/Brent dropped? [Duh, they are substitutable products and more of one affects the other. Thus separating them is ass stupid.]
9. There has been a HUGE increase in 40-45 API oil, which gets the highest price. Brown ignores this. The funny thing is 10 years ago, the peakers tried to say we wouldn’t find more light oil, just tar sands. They got their butts slammed by US LTO.
10. Volume is up. Price is down. SCORE BOARD. Peakers just don’t like to face facts. Hence the scramble with definitional excuses. (Some of them do it explicitly and just exclude LTO even below 45 as “unconventional”. I can tell you someone buying oil at the refinery door is just fine with Bakken oil versus Permian from a conventional legacy field–they are very similar chemically.)
onlooker on Mon, 15th Feb 2016 11:06 am
“This condensate is less dense than oil and can interfere with optimal refining if too much is mixed with actual crude oil.”
“Refiners are already complaining that so-called “blended crudes” contain too much lease condensate, and they are seeking out better crudes straight from the wellhead.”
Nony on Mon, 15th Feb 2016 12:00 pm
I love cock
Apneaman on Mon, 15th Feb 2016 12:11 pm
Nony, it wasn’t “peakers” who changed the definitions (moved the goalposts) of what constitutes oil.
How changing the definition of oil has deceived both policymakers and the public
http://resourceinsights.blogspot.ca/2012/07/how-changing-definition-of-oil-has.html
Why after a 150 years as an industry do the definitions suddenly need to change? Please provide a long winded, gobbly gook, weasel word filled 10 point presentation to try and explain away this simple fact nony.
Nony on Mon, 15th Feb 2016 12:21 pm
If the condensate is so different than crude and if crude has peaked, than why has the price of WTI dropped?
C&C is normal metric, as discussed above.
ennui2 on Mon, 15th Feb 2016 12:27 pm
“everything around that one data point is playing like the Peak Oil Symphony Orchestra.”
Nope. Go down to your gas station and see how you’re wrong there.
LOW PRICES
Plantagenet on Mon, 15th Feb 2016 12:39 pm
The EIA defines condensate for legal purposes as oil so there really ins’t much point arguing about it.
Its the law.
Cheers!
onlooker on Mon, 15th Feb 2016 12:40 pm
Because it is a Con Nony, people are believing it is crude. That is why.
Apneaman on Mon, 15th Feb 2016 12:44 pm
ennui2 tard, you still don’t know what the definition of peak oil is do you? That’s why, like boat, all you can do is tell us about local gas prices. By your logic high prices means peak oil is real and low means not. So did you believe in peak oil when the price was $147, but then change your mind after? At what price? Do you even know what the word “peak” means? Let me help you. If it is in relation to a commodity it means the maximum amount one would see. The peak, the pinnacle, the top, the most, the maximum. How would you know for certain that you have peaked? Years later after the fact to be certain. How about the word “debt”? Need some help with that one too?
67 US Shale Companies Declared Bankruptcy in 2015
http://www.marketpulse.com/20160211/us-shale-bankruptcies-reach-67-in-2015/
Some Bankrupt Oil and Gas Drillers Can’t Give Their Assets Away
http://www.bloomberg.com/news/articles/2016-01-20/some-bankrupt-oil-and-gas-drillers-can-t-give-their-assets-away
Apneaman on Mon, 15th Feb 2016 12:47 pm
Nony, answer the fucking question. Why change the definition after 150 years?
onlooker on Mon, 15th Feb 2016 1:00 pm
See guys we are the ducking from the issues it is you deniers who can only repeat the same old tired mantras and think so simply and superficially. I think AP made you realize you look foolish.
onlooker on Mon, 15th Feb 2016 1:01 pm
sorry not ducking
Nony on Mon, 15th Feb 2016 1:06 pm
I did–the definition didn’t change. Your predicate is incorrect.
twocats on Mon, 15th Feb 2016 1:07 pm
ennui,
low price of oil is a reflection of “economy in tatters”. this is part of a cycle that has been fairly well understood now in PO community for at least 5 years, and probably much earlier if one were to dig around for longer than the 15 seconds it took me to find this link:
http://peakoil.com/generalideas/peak-oil-and-the-new-boom-bust-cycle
This low oil price is bringing on new demand – for instance total miles driven has actually hit a new high point around December 2014 and is going up exponentially. I will grant that is an accomplishment. So I will concede, maybe more than “just one data point”.
But the fact that low oil prices has renewed demand and will lead to another oil-price/supply shock which will lead to a demand shock which will lead to a price shock is a pretty easy concept to understand.
And the fact that these shock points are starting to compress (increase in frequency) should also be clear.
So, by all means, fill ‘er up, that will prompt the next price/supply shock cycle. Or don’t fill ‘er up and watch capex for production & exploration continue to implode, leading to an even LARGER price/supply shock (albeit at a longer duration frequency). Your pick.
Nony on Mon, 15th Feb 2016 1:15 pm
Ape: see here. Time series goes back to 1920s:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M
Apneaman on Mon, 15th Feb 2016 1:21 pm
More bullshit nony. Keep clinging to your religion and keep ringing up those sock puppet nickles.
Nony on Mon, 15th Feb 2016 1:27 pm
definitions. from EIA. Professionals.
https://www.eia.gov/dnav/pet/TblDefs/pet_crd_crpdn_tbldef2.asp
“A mixture of hydrocarbons that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Depending upon the characteristics of the crude stream, it may also include:
Small amounts of hydrocarbons that exist in gaseous phase in natural underground reservoirs but are liquid at atmospheric pressure after being recovered from oil well (casinghead) gas in lease separators and are subsequently commingled with the crude stream without being separately measured. Lease condensate recovered as a liquid from natural gas wells in lease or field separation facilities and later mixed into the crude stream is also included;
Small amounts of nonhydrocarbons produced with the oil, such as sulfur and various metals;
Drip gases, and liquid hydrocarbons produced from tar sands, oil sands, gilsonite, and oil shale.
Liquids produced at natural gas processing plants are excluded. Crude oil is refined to produce a wide array of petroleum products, including heating oils; gasoline, diesel and jet fuels; lubricants; asphalt; ethane, propane, and butane; and many other products used for their energy or chemical content.”
Nony on Mon, 15th Feb 2016 1:28 pm
Ape: be scientific, not religious. You need to look at facts and be willing to learn from them. EVen when you don’t like them
marmico on Mon, 15th Feb 2016 2:02 pm
Prediction: Jeffrey “Condensate Con” Brown will be empirically falsified just as Jeffrey “Export Land Model” Brown was empirically falsified at the 95% confidence level.
rockman on Mon, 15th Feb 2016 4:12 pm
FYI: Since they like to use Schlumberger definitions we’ll stick with Big Blue: it defines condensate as crude oil. And yes: they do define condensate. But they also classify it as crude oil. Confused, don’t believe it? Just pull up its website with all the oil patch definition. And no: NGL’s are neither condensate or crude oil. And yes: the EIA use C+C as a metric of crude oil production because, by the decree of the Almighty and infalable Schlumberger, condensate = crude oil.
Folks are free to define sh*t however they want. But if we want to follow this author’s recognized expert, Schlumberger, then condensate = crude oil.
Another FACT they ignore even though they refer to Texas oil and condensate production volumes: the Texas Rail Road Commission doesn’t distinguish oil from condensate by API gravity…never has…never will. IOW a well producing 38 API could be counted as condensate and one producing 43 API could be counted as oil. Confused? Try this: a well might have its 42 API liquid hydrocarbons counted by the TTRC as condensate when it begans producing and 5 years later the TRRC would count the same 42 API production as oil. I’ve explained how the TRRC classifies production before. Want to know: go to its website.
US refineries have increased oil imports because the US has become the world’s refinery: we now export products made from almost ONE BILLION BBLS OF OIL PER YEAR. And guess what US refiners must have to crack those heavy oil imports so we can export all those products? Condensate. US refiners crack neither condensate nor heavy oil efficiently: they needed blended oil in the 31 to 33 API range to max output. Before the shale boom the Gulf Coast refiners had to import condensate for blending. The shale boom eliminated that need. In fact last year Venezuela imported Libyan light oil to blend with their heavy crap. Apparently there wasn’t enough available from much closer US sources. LOL.
Likewise Canadian refineries gobbled up tens of millions of bbls of Eagle Ford condensate for the same reason. And the boys in Alberta loved our condensate even more: they’ve been importing over 120 MILLION BBLS OF US CONDENSATE PER YEAR to mix with their oil sands production (the blend is dilbit…look it up) so the could get that crap down the pipelines to the US. Canada has only 450,000 of the 750,000 bbls per day it needs. They use the US condensate to ship about 1 MILLION BBLS OF DILBIT to us everyday.
In a word this continuous ranting that condensate production has little value to the energy dynamic is easily shown to be complete bullet*t. As the FACTS just presented easily prove.
Truth Has A Liberal Bias on Mon, 15th Feb 2016 4:14 pm
Gulf coast refineries are increasing crude oil imports with a API below 45. Cushings is full of condensate. Mixing a half a barrel of Western Canadian Sekect (API of 20) with half a barrel of condensate with an API of 60 may give you a barrel with an API of 40 but it doesn’t provide you with any medium length hydrocarbon polymers. 1/2 a barrel of short chain polymers and 1/2 a barrel of long chain polymers does not result in a barrel of medium length polymers. Texas gulf coast refineries are increasing imports of crude. If Cushings was full of crude and not condensate then that wouldn’t be happening.
marmico on Mon, 15th Feb 2016 5:00 pm
Pennsylvania, the heart of the increase in U.S. natural gas production in the Marcellus, produced 19,000 barrels per day of crude+condensate (C+C) in November, 2015. It’s a friggin’ 2 decimal point rounding error in U.S. C+C production.
https://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_m.htm
Jeffrey Brown fell off his ELM rocker and is now counting pins on the heads of dancing angels.
tahoe1780 on Mon, 15th Feb 2016 6:06 pm
Rock, is condensate counted twice, the 120M bbls shipped to Canada and as a fraction of dilbit that comes back?
Truth Has A Liberal Bias on Mon, 15th Feb 2016 8:03 pm
My prediction is Nony will continue with his retarded bullshit. I hope he dies in the famine.
Apneaman on Mon, 15th Feb 2016 8:05 pm
I hope so to, but not until he “purchases” a few cans of soup off you.
rockman on Tue, 16th Feb 2016 6:01 am
Tahoe – I’ve searched for that answer numerous times but haven’t found one I have confidence in. But if I had to guess when someone notes we’ve IMPORTED 1 million bbls of “oil sands production” that includes the condensate blend. Where it gets confusing is when someone else says the Canadians PRODUCED 1 million bbls of oil sands production: that might not include the condensate blend. And one more uncertainty: a certain amount of raw oil sands production (not dilbit) is shipped in unheated rail cars which have to be heated in order to unload. Someone has these numbers but I haven’t found them sharing.
And let me point out something that many don’t know: Cushing isn’t just a storage facility…it’s also a blending plant. As various API oils come in they are blended to make mixture more usable by the refineries. But there is no “one size fits all” blend: they can only blend the oils they receive. There are companies in Cushing that do nothing but buy oil, blend it and then sell to refineries. Which is why some refineries have started buying oil directly from producers to make more customized blends more suited to their needs. I know this is sorta insider info but in truth the entire shipping, storing, blending, marketing and refining dynamic is far more complex then the general public understands. One more thing many don’t understand: much of the oil stored and shipped thru Cushing (and all other storage facilities) doesn’t belong to the companies that produced the oil. Most oil is sold at the well head to oil marketing companies like Plains Resources. They are called “midstream” companies. Upstream: oil producers…downstream: refineries. Plains “handles” 1.5 BILLION bbls and of oil and NGL’s per year. By handles it means they transport it for a fee or actually buy the oil and markets it themselves. The Rockman has sold much of his oil to Plains. And he has no idea of where it went, how it was blended or what refineries it ended up at. More important: he really doesn’t give a sh*t either. LOL. Once it leaves his lease and he gets paid the rest of the dynamic has no impact on him…just as it has little impact on most producers.
ERRATA on Tue, 16th Feb 2016 7:23 am
“Mixing a half a barrel of Western Canadian Sekect (API of 20) with half a barrel of condensate with an API of 60 may give you a barrel with an API of 40 but it doesn’t provide you with any medium length hydrocarbon polymers. 1/2 a barrel of short chain polymers and 1/2 a barrel of long chain polymers does not result in a barrel of medium length polymers.”
Bravo, that’s right! This is the right explanation.
With such a mixture can not do the quality of gasoline – fuel.
Rectification (distillation) is only a process of physically separating!
https://en.wikipedia.org/wiki/Oil_refinery
Nony on Tue, 16th Feb 2016 1:32 pm
If you look at the Canadian oil production (see the NEB website, read the excel spreadsheet), they don’t report dilbit. Canada reports internal production. World numbers composed of Canada plus US will have the correct amount (not be double counted).
https://www.neb-one.gc.ca/nrg/sttstc/crdlndptrlmprdct/stt/stmtdprdctn-eng.html
As far as the US import-export balance: condensate is an export, dilbit is an import. The net import is the bitumen. So the US import/export balance is also correct.
Note that many other countries blend oil or even just transship it. So this is not an unknown problem to have to watch out for.
Some double counting (or undercounting) can occur in specific cases around the globe–tracking every barrel ends up being an estimate anyways! But bulk double-counting of US condensate used for dilbit is not occurring.
If PLANT condensate is used for bitumen dilution, the situation is as follows: the global crude and leased condensate number will still not be double counted. Because, as per above the total US/CA production is just based on adding NEB and US EIA numbers for internal national crude and lease condensate production! [However the import balance for crude and lease condensate in the US will be affected: showing more net imports because some plant condensate is considered a product on export and may be reclassified crude and lease condensate on import. However, even in this case, the total liquids (crude and condensate plus products) import/export balance will be correct. It’s just that a little “product” got redefined back as “oil”. It’s even arguable that this is correct! Since it WILL need to be refined…it has lost it’s “productness” when you mixed it with bitumen.]