Do Ya Think I'm Waxy? - Is the Uinta Basin Poised for Major Crude Production Gains?

The Uinta Basin in northeastern Utah boasts enormous reserves of unusual, waxy crude oil with many characteristics that refiners desire: medium-to-high API gravity and very low sulfur, acid and metal content among them. Moreover, the combination of long horizontal wells and hydraulic fracturing now give producers access to the basin’s waxy crude at a remarkably low cost per barrel. The catch is that the crude’s most notable feature — its shoe-polish-like consistency at room temperature — poses a major economic and logistical challenge: how to cost-effectively transport the stuff to distant markets. Refineries in nearby Salt Lake City have been making good use of the waxy oil for decades, but there are limits to how much they can process, so Uinta Basin producers, midstreamers and investors have been working on ways to move large volumes to faraway places like the Gulf and West coasts. They may finally be making real progress. Today, we begin a series on the prospects for taking waxy-oil production from the often-overlooked Uinta Basin to the next level.

Crude oil is a commodity, which suggests a kind of uniformity — corn is corn, silver is silver, orange juice is OJ — but crude sure as heck comes in many, many varieties. Heavy, medium, light, superlight. Very sour to very sweet (a measure of sulfur content, from high to low). Viscous like thick-as-molasses bitumen to very free-flowing like condensate. High total acid numbers (TANs) to low; the same for metal content. We could go on. The point is that crude can be as different as the musical styles of John Lennon and “Weird Al” Yankovic, and that the value of each type of crude to refiners is based on the oil’s unique matrix of characteristics. Refineries can be very different from one another too, of course; depending on its equipment and its sophistication, refineries range widely in their ability to break down different crude types into high-value products like gasoline, distillate, and even lube oil. And don’t forget that a big factor in the delivered cost of crude to refineries is, well, the cost of delivery.

These are good things to keep in mind as we start our look at the Uinta Basin’s past, present and future crude oil production trends. The Uinta Basin — pronounced “you-IN-ta” — includes parts of Duchesne and Uintah counties in northeastern Utah (blue-shaded area in Figure 1 map and inset), more than 100 miles east/southeast of Salt Lake City.

To access the remainder of Do Ya Think I'm Waxy? - Is the Uinta Basin Poised for Major Crude Production Gains? you must be logged as a RBN Backstage Pass™ subscriber.

Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at info@rbnenergy.com or 888-613-8874.