I Believe in Miracles ... Where're You From, You Waxy Thing - Uinta Basin's Waxy Crude Is on a Roll

Times are good indeed in the Uinta Basin in northeastern Utah, where one of the world’s most unusual — and, in many ways, most desirable — crude oils is being produced with increasing efficiency and in fast-rising volumes. Yes, production of the Uinta’s trademark waxy crude is up by more than 50% in the past year and a half, to record-shattering levels, and demand for the dense, slippery hydrocarbon, with its minimal sulfur content, next-to-no impurities and favorable medium-to-high API numbers, is up too. Waxy crude may be a pain in the butt to transport and store — it needs to be kept warm to remain in a liquid state — but it is a staple at the five refineries in nearby Salt Lake City, and at least a handful of Gulf Coast refineries want as much of the stuff as they can get their hands on because of its desirable qualities. But without infrastructure enhancements, there may be limits to how much Uinta production can grow from here, as we discuss in today’s RBN blog.

Regular readers of our blogs know that we have a soft spot for quirky hydrocarbons — ethane, for example, because it can be either rejected into natural gas and sold for its Btu value or separated out and sold as a top-notch steam-cracker feedstock. And how can we not wax poetic about the Uinta Basin’s waxy crude, which, in addition to its unique physical properties (and transportation and storage challenges), inspired our most popular blog title ever: “Do Ya’ Think I’m Waxy,” which we’ve used a record nine times. (Talk about going to the well once too often!) Today, we return to the Uinta yet again, this time with a new song-title bastardization (“You Waxy Thing”) and a new story to tell, namely that waxy crude production has been on a tear the past 18 months and has the potential to continue growing — if (and only if) producers and midstreamers there can address a pesky issue: associated gas takeaway constraints.

But we’re getting ahead of ourselves. Before we delve into what’s been happening lately in the Uinta, let’s do a quick review of the basin and its weird-as-heck hydrocarbon. The Uteland Butte play within the Uinta Basin (blue-shaded area in Figure 1) — and particularly the area between the towns of Roosevelt, Duchesne and Myton, UT — is the focus of most recent activity. The Uteland Butte includes parts of Duchesne and Uintah counties, which are located a two-and-a-half-hour drive east/southeast of Salt Lake City. Since the late 1940s, the basin’s many stacked, hydrocarbon-bearing layers have produced a total of nearly 1 billion barrels of crude oil, the vast majority of it either “black wax” crude with an API gravity of 30 to 34 degrees or “yellow wax” crude with API gravity of 38 to 44 degrees. Those medium-to-light values make waxy crude suitable for blending with a wide range of other crudes to achieve desired feedstock specs. Uinta waxy crude also has super-low sulfur content (0.01%), low acid content (TAN, or total acid number, of less than 0.1%), and low metals and nitrogen content, also making them great for blending.