The Outlook For US Condensate Looks Brighter -- Richard Zeits -- February 5, 2018

Continuing his discussion of the lights and the ultra-lights, Richard Zeits has a new essay on US condensates over at SeekingAlpha:

• condensate for delivery in Asia are commanding strong premiums over crude benchmarks
• U.S. condensate producers are well positioned to grow volumes in 2018, notwithstanding fundamental uncertainties in natural gas
• U.S. super-rich gas plays have seen activity declines in the last three years but may experience a revival in 2018

• Bakken oil: approximately 50° API
• ultra-lights: 55.1°+ API

Condensates are typically low-sulphur crudes and are characterized by a low cost to process. Naphtha yields are obviously high (naphtha is used as gasoline blending components and petrochemical feedstocks). However, it is important to remember that heavier condensates also have significant middle distillate yields.
Naphtha-based ethylene margins in northeast Asia and middle distillate margins have been excellent in the last few months. At the same time, the supply of light sweet crude to Asia tightened a month ago due to the unforeseen interruption on the Forties Pipeline. As a result, demand for condensate has not been fully satisfied.

Another great introduction to condensates. Archived. 

I Have To Call It A Day For Now -- Leave You With This -- Off The Net For Awhile -- Zeits On US Light Oil / Condensate Production -- January 24, 2018

Link here over at SeekingAlpha.

Summary:

• claims that U.S. crude growth is dominated by super-light and ultra-light grades is a misconception
• in fact, production data show the opposite trend
• she super/ultra-light component of the U.S. crude stream has shrunk significantly in the last three years
• a recovery in these categories is in progress. In our expectation, future volumes will surprise to the upside 

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Tammany Hall Redux

I have two books on my nightstand that I really enjoy: one I have had quite some time and it often ends up back on the shelf only to be pulled down and placed back on the nightstand, and then a more recent one. Neither of them are "about" Tammany Hall (NYC) but both of them have devoted a considerable amount of space to Tammany Hall.

When I read about Tammany Hall, I immediately think of Barack Obama. He came close to re-establishing his version of Tammany Hall. If Hillary Clinton had been his successor, without a doubt, Tammany Hall would have been re-created. It would have just gone by a different name.

On US Petroleum Exports -- Al Troner's Article In Oil & Gas Journal On Light Ends -- June 6, 2016

From Al Troner's June 6, 2016, article in Oil & Gas Journal:

Almost unheralded, the US has emerged as the largest exporter of oil products, based on Gulf Coast refiners' use of relatively inexpensive, domestically produced tight oil. The product-export flood has been paralleled by large-volume NGL sales, with LPG (liquid petroleum gas) leading the way, in particular propane.

US sales have not only saturated the Atlantic Basin market but also become important to Asia Pacific supply. At mid-2015 China was the biggest single customer for US propane. And the opening of a revamped and enlarged Panama Canal by yearend will likely increase westbound LPG exports from the Gulf Coast even further. By 2018 US exports of LPG exports will likely equal or exceed those of the United Arab Emirates and Qatar combined.

Canada remains the top condensate US export market. APEC expects US supply to dominate Canadian diluent use until at least end-decade. Yet domestic condensate output has been growing rapidly in Canada, based on tight oil and shale gas development, in a trend APEC expects will gradually back out US sales in the coming decade. A steadier though smaller market emerged for slightly refined condensate in Europe, where refiners use the material regularly to fill out crude slates. By 2018 US condensate exports will exceed overseas sales by Saudi Arabia, and possibly by the kingdom and Qatar combined.

Ethane exports have begun as US sellers pioneered waterborne ethane shipments to buyers in the UK, Norway (Ineos and Sabic), and Sweden (Borealis). This has been followed by sales to India (Reliance) and China (Orient Energy).

The emergence of the light-ends space has not been solely a western market phenomenon. It has had East of Suez impacts as well, much of it centered on the Persian Gulf.

That opening line: Almost unheralded, the US has emerged as the largest exporter of oil products,.... occurred during the Obama administration.

Things to think about:

• Saudi's challenges
• US shale oil revolution
• 90% of tankers carrying petroleum products will be able to transit the Panama Canal starting next year
• Asian countries want to diversify their source of petroleum products; do not want to depend on Mideast as sole supplier
• Poland diversifying petroleum sources; doesn't want to rely solely on Russia
• India's growing demand for transportation fuel
• the global demand for naphtha
• "friendly" regulatory environment along the US gulf coast
• QUALITY -- the US sets the standards
• outside the US, instability seems to be the by-word; I can't say the global environment is any worse, but if Nigeria and Iraq are any examples, I would say the global environment is as bad as it's ever been
• US oil exports rise 7-fold in three months
• it never seems to quit

Huge Insurer To Exit Califoria Over Huge ObamaCare Losses -- June 1, 2016

ObamaCare, headline, section B, today's Wall Street Journal: UnitedHealth to exit California, a key market. Business losses mount.

• Trump: "Let's Make America Great Again"
• Hillary: "Let's Re-Visit ObamaCare"
• Gary Johnson: "Let's Make Hillary President"

May's auto sales data will be out this week. Last month's data, April's top selling cars:

#10: Chevrolet Malibu
#9: Chrysler 200
#8: BMW 3-Series
#7: Chevrolet Camaro
#6: Toyota Camry
#5: Honda Accord
#4: Mazda MX-5 Miata
#3: Ford Mustang
#2: Ford F-Series
#1: Honda Civic

Tesla: free-charging won't be available for Model 3 owners, unlike earlier models/owners.

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Back to the Bakken

Active rigs:

	6/1/2016	06/01/2015	06/01/2014	06/01/2013	06/01/2012
Active Rigs	27	80	189	187	215

RBN Energy: condensate update.

“Condensates are long and you can’t give them away … No, things have changed – condensate supply is tight and prices are running up relative to WTI … But wait wait, the oversupply is back and prices are down again.” No wonder the market’s love for condensates has faded.  It’s a liquid hydrocarbon that is being buffeted by every force the market can bring to bear: declining production, lots of new committed infrastructure (stabilizers, pipelines, and splitters), wide-open export markets, volatile crack spread splitter economics -- the list goes on. Adding to this whirlwind is the fact that historically there has been limited analytical data to work with, with most condensate information buried deep inside crude production numbers from producer investor presentations and less-than-revealing Energy Information Administration (EIA) crude oil reports.  But we have some new tools to help understand what’s going on, including the EIA’s new 914 crude quality data and condensate export numbers from ClipperData.  Today, we continue our exploration of rapidly evolving condensate markets.

In Part 1 of Faded Love we revisited RBN condensate classics, including Fifty Shades of Condensates and Like A Box of Chocolates. 

We showed that while condensates are produced from all of the major basins across the U.S., the Eagle Ford in South Texas has been responsible for most of the production growth over the past five years, and how the Eagle Ford has been hit harder by low crude prices than any of the other major shale plays, resulting in declines in condensate production.  We then touched on the splitters built to process condensates in the U.S. and on other infrastructure to handle segregated processed condensate for export – now no longer required since the lifting of the crude/condensate export ban.  With the ban gone, there’s no longer anything special about a condensate barrel; it is just like any other crude oil, except lighter.  These developments have converged to create a topsy-turvy market for condensates, where both opportunities and dangers lurk for those brave enough to buy, sell and trade condensate barrels.

From today's RBN Energy blog: an update on the new EIA form 914:

The new 914, in use since January 2015 reporting, is an expanded survey for the collection of oil and gas production data from a sample of operators of oi/condensate and natural gas wells in 15 states and the federal Gulf of Mexico. For our purposes here, the big deal is that the new EIA-914 collects this crude oil production data in 10 API gravity buckets. So, after years of, well, Dancing in the Dark (our mid-2015 blog on condensate splitters), we get our first shot at official condensate statistics using the two API gravity buckets above 50 degrees API shown in Figure 1. Sampled producer companies (those large enough to be included in the survey) are required to fill out the form each month for their oil production and oil sales by API gravity category. There are 10 API gravity categories on the form reported in total for the U.S., but due to EIA’s confidentiality rules, these are collapsed to only four categories for the reporting of state‐level API gravity estimates.

There are all sorts of statistical quirks and machinations that EIA must go through to use this data due to the facts that 1) it is only a sample (85% volumetric coverage based on data from 450 operators out of roughly 13,000 oil and gas operators in the U.S.), and 2) EIA trues up and reconciles the 914 form data with production data from the individual states provided and consolidated by our friends at DrillingInfo.