{"id":1594,"date":"2015-02-19T13:11:14","date_gmt":"2015-02-19T19:11:14","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=1594"},"modified":"2015-02-19T17:31:47","modified_gmt":"2015-02-19T23:31:47","slug":"eagle-ford-who-are-you","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2015\/02\/19\/eagle-ford-who-are-you\/","title":{"rendered":"Eagle Ford What Are You?"},"content":{"rendered":"

\u201cMay the real Eagle Ford stand up\u201d is another title I was thinking for this article.\u00a0 As I get ready to launch Oil Market Analysis<\/a>,one of the areas I have been focusing in is the condensate issues in the Gulf.\u00a0 In particular, the production from the Eagle Ford region \u2013 see figure below.<\/p>\n

\"\"<\/a><\/p>\n

There is much discussion on this production being mainly condensate.\u00a0 Condensate is a crude oil \u2013 just a really light crude oil.\u00a0 A common unit of measurement for the density\/gravity of the crude is API.\u00a0 The higher the API, the lighter the crude oil becomes.\u00a0 Some consider 45+API to be condensate.\u00a0 Most condensates are also extremely low in sulfur \u2013 very sweet.\u00a0\u00a0 To put it into context LLS is around 36 and WTI is around 41 API.\u00a0 There is an issue in being too light \u2013 but you can never be too sweet (such is life).\u00a0\u00a0 Your product yields will suffer particularly in the No. 2 cut (Diesel, Heating Oil, and Jet).\u00a0\u00a0 Also being so light, in a refining region not expecting this trend, causes operational issues that can be addressed overtime given the right pricing incentive.<\/p>\n

I have gathered 4 different assays of Eagle Ford.\u00a0 They range from 47 to 64 API.\u00a0\u00a0 Platts own price marker methodology notes<\/a> the range of assays from 40.1-62.3 .\u00a0\u00a0 They settled upon a 47 API.\u00a0\u00a0 They also note the cut range used and I adjusted another assay to reflect the Platts assessment seen in the figure below. The other interesting thing to note is there seems to be an Eagle Ford and an Eagle Ford Condensate marketed.\u00a0\u00a0 This may explain the large variance.\u00a0\u00a0 However, regardless of the marketing, the value of your Eagle Ford as a refiner can swing significantly.\u00a0\u00a0 Below is the cracking value of the various Eagle Ford assays relative to LLS from our USGC cracking model, from our Oil Market Analysis Platform using the futures market strip on 2\/11\/15.<\/p>\n

\"\"<\/a><\/p>\n

Cracking valuation models are strictly based on the yield and product value.\u00a0\u00a0 This does not take into account the logistic issues of having to truck condensate, which could easily add another few dollars to the discount of Eagle Ford.\u00a0\u00a0 The model does take into account the quality issues for both octane and sulfur.\u00a0\u00a0 Having run and managed the South Louisiana Quality Bank, crude quality can have significant ramifications.\u00a0\u00a0 Declaring a label of Eagle Ford, given the variations of quality, will likely not mean much.\u00a0\u00a0 Contracts dealing with Eagle Ford will have to have quality specifications and processes to deal with variations.<\/p>\n

The largest driver among the various assays is the amount of diesel and jet produced.\u00a0 In some assays, we produce too much light ends, making a limited amount of finished gasoline and left with Naphtha.\u00a0\u00a0 This drives the discount seen in the Eagle Ford 64.\u00a0 Increasing the reformer capacity is needed.<\/p>\n

To deal with the lighter crudes, more reformer capacity will be needed along with greater alkylation.\u00a0 The octane values from these lighters crudes are not high, at least from the data I have.\u00a0 The discount to Eagle Ford will come in some, over time.\u00a0 This will not be due to the ability to export the crude oil.\u00a0\u00a0 The export market is expected to be ultra-competitive when it comes to condensates (discussed at a later time).\u00a0 There will be operation issues in the US as refiners adapt to the new feedstock.\u00a0 These issues could include needing to run your crackers less; thereby, likely impacting heat balances.\u00a0 However, these are solvable engineering issues, given an economic incentive.\u00a0\u00a0 The infrastructure of Eagle Ford is being built out.\u00a0 This will lead to a reduction in discount as the transportation cost is reduced.\u00a0\u00a0 Eventually the market will see a uniform stabilized Eagle Ford blend.\u00a0 Until then, pay attention to your quality specifications in your contract and hopefully leave room for adjustments.<\/p>\n

By the way, I will be speaking at the Platts 4th<\/sup> Annual Refining Convention in May \u2013 See agenda<\/a>.\u00a0\u00a0 I will be addressing the issue of condensate and NGL\u2019s in the market and what we can expect to see in terms of market forces in the future.\u00a0 I hope to see you there or even sooner.\u00a0 Please do consider All Energy Consulting to help you in the crude oil and refined products market space.<\/p>\n

Your Crude Processing Energy Analyst,<\/p>\n

David<\/p>\n

David K. Bellman
\nFounder\/Principal
\nAll Energy Consulting LLC- “Adding insights to the energy markets for your success.\u201d
\n614-356-0484
\ndkb@allenergyconsulting.com
\n<\/a>@AECDKB<\/p>\n

Sign Up to AEC Free Energy Market Insights Newsletter<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201cMay the real Eagle Ford stand up\u201d is another title I was thinking for this article.\u00a0 As I get ready to launch Oil Market Analysis,one of the areas I have been focusing in is the condensate issues in the Gulf.\u00a0 In particular, the production from the Eagle Ford region \u2013 see figure below. There is […]<\/p>\n","protected":false},"author":1,"featured_media":1561,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,26],"tags":[360,297,92,198,331,90,359],"class_list":["post-1594","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-oil-petroleum-products","tag-alkylation","tag-cracking","tag-eagle-ford","tag-lls","tag-naphtha","tag-refining","tag-reformer"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1594","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=1594"}],"version-history":[{"count":12,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1594\/revisions"}],"predecessor-version":[{"id":1606,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/1594\/revisions\/1606"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/1561"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=1594"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=1594"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=1594"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}