Condensate City – Eagle Ford Crude Infrastructure Part 9 – Condensate Splitting

Kinder Morgan expect to commission the first 50 Mb/d of condensate splitter capacity at their Galena Park terminal in Houston during the next month. The capacity is leased to BP North America and will be supplied with condensate via Kinder’s Eagle Ford pipeline gathering network. Another 235 Mb/d of condensate splitter capacity could be online by 2017 – most of it in Corpus Christi. Meanwhile the jury is still out on whether it makes more sense for a producer to use a condensate splitter or to just process their condensate through a stabilizer with distillation. Either way the resulting products seem likely to end up in the export market. Today we detail the splitter plans.

This is Episode 9 in our series updating analysis of Eagle Ford crude infrastructure. In Part 1 (see Condensate City – Finding a Home For Eagle Ford Crude) we described a five-fold increase in Eagle Ford crude oil production over the past three years to 1.5 MMb/d. We explained the varying quality and in particular the high percentage of condensate in liquids output (about 45 percent) has caused headaches for producers and refiners alike. Two main pipeline routes to market have developed from the Eagle Ford – south to the Port of Corpus Christi and East to Houston area refineries. In Part 2 we described the crude takeaway systems developed by Magellan Midstream Partners and Kinder Morgan. In Part 3 we reviewed Plains All American Pipeline (Plains) and Enterprise Product Partners (Enterprise). In Part 4 we looked at Harvest Pipeline, Martin Midstream, Energy Transfer Partners and Trafigura. In Part 5 we covered infrastructure developed by Koch and NuStar. In Part 6 we looked at Devon and Genesis as well as Eagle Ford refineries. Part 7 reviewed marine dock facilities at Corpus Christi. Part 8 looked at condensate stabilization capacity in the Eagle Ford and prospects for exports. This time we look at the development of condensate splitter capacity designed to process lease condensate in the U.S.

But before we get to that we note that (as is often the case during this fast paced era of midstream infrastructure development), a new pipeline project and expansion has been announced in the Eagle Ford since we started this series. Plains All American and Enterprise Product Partners announced on November 4, 2014 that they plan to expand their joint venture Eagle Ford crude and condensate Pipeline that runs between Gardendale, TX and Corpus Christi (and links to the Enterprise Houston system at Lyssy) by looping it to double capacity from 300 Mb/d to 600 Mb/d between Three Rivers and Corpus. The two companies are also constructing a new condensate gathering system into their Three Rivers terminal connecting Karnes and Live Oak County production. The expansions are supported by a producer commitment and are expected online in 3Q 2015. The expanded capacity from Three Rivers to Corpus will allow the Eagle Ford pipeline to accommodate increased volumes of crude and condensate shipped on the 200 Mb/d Plains Cactus pipeline from McCamey in the Permian Basin to Gardendale that is expected online in 2Q 2015. Plains and Enterprise also plan to build a new dock terminal at Corpus to support increased vessel traffic and volumes – expected online by 2017. The net impact is another 300 Mb/d of crude and condensate pipeline capacity into Corpus Christi.

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Now back to the splitters. The condensate splitters that we describe here are stand-alone basic distillation units that will process very light crude material such as the lease condensate being produced in the Eagle Ford. The diagram in Figure #1 below is from our friends at Turner Mason and Co and shows a typical condensate splitter. The splitter heats the condensate in a distillation tower to separate out as many as four fractions: natural gas liquids (NGLs), naphtha, kerosene and diesel. The latter are not finished refined products but rather semi-finished components used to make (e.g.) gasoline, road diesel and jet kerosene. Fractions that are too heavy to split are left in the residual oil (also known as atmospheric tank bottoms or ATB). Depending on their size or sophistication, condensate splitters run anywhere from about $100 MM to $400 MM to build and are therefore less sophisticated and expensive than a full refinery that can cost $ Billions. Condensate splitters are though, more sophisticated than the condensate stabilizers that we described in Part 8. A stabilizer can have a distillation tower but it usually only boils off the NGL fractions.

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