Half-million oil barrels daily may qualify for new export class


Half-million oil barrels daily may qualify for new export class


ODESSA, Texas (Bloomberg) -- As many as 500,000 barrels of light oil are processed daily in a way that would make them eligible for export under a new U.S. Commerce Department classification.

Pioneer Natural Resources Ltd. and Enterprise Products Partners LP said this week that the Commerce Department approved their plans to export some ultra-light crude, known as condensate, heated in stabilizers and distillation towers. Stabilization is far less complex than the processing of oil at refineries or at condensate splitters, which separate several gases and other products from crude.

There may be more than 1 MMbpd of condensate-stabilizing capacity in U.S. oil fields, where producers commonly use the minor processing step to reduce the volatility of crude before putting it into pipelines, said Jeff Stake, director of sales for Odessa, Texas-based Allied Equipment Inc. Allied has manufactured and sold stabilizers that can process about 200,000 bpd, Stake said.

More than 90% of condensate that moves through stabilizers is processed in adjacent distillation towers, said Bill Bowers, V.P. of production equipment for Houston-based Valerus, which manufactures and installs the systems.

Processed Crude

Crude oil that has been processed through a distillation tower is no longer crude and can be exported without a license, Jim Hock, a Commerce Department spokesman, said in a written statement. The U.S. prohibits most exports of unprocessed crude.

Stabilizers boil off the lightest, most volatile compounds from liquid hydrocarbon streams in the field, leaving behind ultra-light oil that is safe to transport or store. Some volume is lost in the process. About 500,000 bbl of the resulting crude are churned out from stabilizers and distillation towers daily, Stake said.

Stabilizers can handle as few as 500 bpd or as many as 50,000, said Nader Khaki, director of sales and engineering for SouthTex Treaters Inc. SouthTex has sold as many as 500,000 barrels a day of total stabilizing capacity, including at least one stabilizer to a producer in Colombia, Khaki said.

About 750,000 bbl of condensate are produced from U.S. shale plays daily, said Michael Wojciechowski, head of Americas downstream research for Wood Mackenzie Ltd. The U.S. this year will produce about 650,000 bpd of the lightest classification of crude oil, the Energy Information Administration estimated in a May report.

Shale Plays

U.S. crude production has boomed in recent years, spurred by horizontal drilling and hydraulic fracturing in shale plays. Output has risen 46% since the start of 2012 to nearly 8.5 MMbpd, the highest level since 1986.

Stabilizing is widespread in several shale plays, including the Williston basin in North Dakota, the Permian in West Texas and the Utica in Ohio, Stake said. It’s most prevalent in the Eagle Ford, home to some of the lightest crude in the U.S.

“The new light hydrocarbons that come from all of the shale production, for the most part those are candidates for needing stabilization,” Bowers said.

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