Way back when—before 2012—few outside a small cadre of oil producers and marketers paid any attention to condensates, or even knew they existed. Then two events shook the condensate world. First came rapid growth in the Eagle Ford, where crude oil production turned out to be almost half condensates. Then the Department of Commerce started allowing condensate exports while maintaining the ban on international sales of mainstream crude oil. Suddenly condensates were the star of the show. But like the careers of one-hit rock & roll wonders, the stardom didn’t last long. The crude oil price crash hit Eagle Ford hard, resulting in a disproportionate decline in condensate production. Congress then sent condensates further back into obscurity by removing the export ban for all crude oil in December 2015, eliminating any special status for the product. That was the end of the road for the condensate story, right? Wrong. Because during condensate’s day in the sun, billions were spent on pipelines, stabilizers, splitters, export facilities and refinery modifications, all focused on providing new markets for condensates. Oops. Today we consider how the next chapter of the condensate saga will play out.
This blog continues the Faded Love series on condensates (conde for short) that we started posting a few weeks back. In Part 1 we showed that while condensates (super-light crudes) are produced from all of the major basins across the U.S., the Eagle Ford in South Texas has been responsible for most of the production growth over the past five years, and that the Eagle Ford has been hit harder by low crude prices than any of the other major shale plays, resulting in declines in condensate production. We then touched on the splitters built to process condensates in the U.S. and on other infrastructure to handle segregated processed condensate for export –– now no longer required since the lifting of the crude/condensate export ban. Then in Part 2 we got into the weeds, looking at condensate production trends using the newly enhanced Energy Information Administration (EIA) dataset called the EIA-914, which gives us crude oil production statistics in 10 API gravity categories, including the two API gravity buckets above 50 degrees API where condensates reside. At that time the data confirmed that condensate production was falling, particularly in Texas. Since then, condensate production has continued to decline.
Figure 1 shows conde production in two of EIA’s 914 production data categories. The brown line is total U.S. production greater than 55 API, which fell from about 550 Mb/d to less than 470 Mb/d in May 2016. Slumping Eagle Ford production has been responsible for most of this decline. The blue line shows Texas production greater than 50 API. (EIA consolidates the 50-55 and 55+ categories for individual states for confidentiality purposes.) Even though the data is not apples-to-apples, it is still quite apparent that production of the lightest condensates is down by about 15% and that the decline shows no sign of abating.