Starting October 1, Plains All American began assessing a $0.50/bbl surcharge on all crude entering its Gulf Coast crude oil system that exceeds the company’s mercaptan specification. Mercaptans are organic sulfur compounds with a strong, ‘skunky’ odor that can occur naturally in crude oil or form through chemical reactions associated with well completions and stimulation fluids. While typically present only in trace amounts, most pipeline-quality “sweet” crude oils have mercaptan sulfur levels below 20–40 ppm (parts per million). Excessive mercaptan levels can create odor and corrosion issues, complicate refining operations, and trigger complaints from exporters (see the blog O Captain! Mercaptan!). Plains and several other pipes have a spec of 75 ppm.
Mercaptans are the same class of compounds used to odorize natural gas and propane so that leaks can be detected by smell — a helpful trait in fuels, but not so much in crude oil flowing through pipelines and tanks.
Plains operates the largest crude gathering network in the Permian Basin, linking production to long-haul pipelines and marine export terminals at Corpus Christi and Houston. That scale makes the company’s crude quality policies influential across the region’s midstream market. The decision to implement a mercaptan surcharge suggests that Plains has been receiving increasing volumes of crude that do not meet its specs — either because of localized quality problems at the lease or blending points, or due to cross-contamination from higher-sulfur streams in storage or transport.
The underlying cause of the elevated mercaptan readings has yet to be determined. Whatever the root cause, Plains’ move serves as a reminder that crude quality remains a critical operational and commercial concern. With growing export volumes and more commingled crude streams, even a small rise in mercaptan levels can cause big headaches for shippers and refiners alike.
