Condensates

“Condensates are long and you can’t give them away … No, things have changed – condensate supply is tight and prices are running up relative to WTI … But wait wait, the oversupply is back and prices are down again.” No wonder the market’s love for condensates has faded.  It’s a liquid hydrocarbon that is being buffeted by every force the market can bring to bear: declining production, lots of new committed infrastructure (stabilizers, pipelines, and splitters), wide-open export markets, volatile crack spread splitter economics -- the list goes on. Adding to this whirlwind is the fact that historically there has been limited analytical data to work with, with most condensate information buried deep inside crude production numbers from producer investor presentations and less-than-revealing Energy Information Administration (EIA) crude oil reports.  But we have some new tools to help understand what’s going on, including the EIA’s new 914 crude quality data and condensate export numbers from ClipperData.  Today, we continue our exploration of rapidly evolving condensate markets.

Few segments of the energy market have experienced the roller-coaster ride that U.S. condensates have been on over the past five years.   Prior to 2011, U.S. condensates were a forgotten backwater of the hydrocarbon complex, mostly blended off into crude oil.  Then condensates rapidly transitioned from obscurity to an oversupplied, price-discounted growth market, then to a driver of massive infrastructure investment, then to the star of the show as the only member of the U.S. crude oil family that could be exported.  By mid-2014, producers and midstreamers were in love with condensates.  Exports were legal and growing.  New pipeline, splitter, stabilizer and export dock infrastructure was coming online.  U.S. condensate markets were tightening and condensate prices were increasing.  Then in one fell swoop in December 2015, Congress swept away all export restrictions on crude oil, potentially relegating U.S. condensates back to the obscurity from whence they came.

In time honored RBN blogging tradition – we’ve been at this blogging business three years –we look back today at the 250 blogs posted this year to see which ones had the highest hit rates.  The number of hits any blog gets tells you a lot about what is going on in the energy markets – which topics resonate with our members, and which don’t attract much attention.  Last year the big hitter blogs came in about 17,000 hits.  This year the big numbers are closer to 50,000.  With that many folks paying attention these days it is even more important that we take a page out of the late Casey Kasem’s playbook to look at the top blogs of 2014 based on numbers of website hits.

On this, the last day of 2013 we thought it would be interesting to look back at the 250 or so RBN blogs posted this year to see which ones had the highest hit rates.  When a blog article gets a lot of hits – some up to 17,000 or more – it tells you something about what is going on in the market.  So like we did last year, we’ll take a page out of Casey Kasem’s playbook to look back at the top blogs of 2013 based on numbers of website hits.  

Finding a home for growing condensate range material being produced in the Ohio Utica shale play involves local refinery deliveries as well as new transport routes to markets outside the region as far away as Canada. Midstream companies are busy developing infrastructure plans to gather both wellhead condensate and output from natural gas processing plants in the region. Today we detail MPLX and its sponsor Marathon Petroleum Corporation’s (MPC) recently announced Utica shale plans.

The surging production of condensate, or ultra-light crude oil, from America’s new shale-oil plays presents an opportunity that’s only just beginning to be recognized by much of the hydrocarbon market.  Historically U.S. condensates have been a tiny sliver of that market, usually blended into crude. Now there is just too much of the stuff, particularly in places that aren’t yet ready to process it in large quantities. In this next installment of Fifty Shades of Condensates we explore the constrained domestic demand for “raw” condensates at U.S. Gulf refineries and petrochemical plants, and the promising international outlets for condensate in Canada and Asia. Bottom line: unless the unlikely happens and the U.S. lifts restrictions on exporting “raw” condensate, producers, traders and other players will either be selling it here at a discount, or spending money to transform it to buy a little optionality. It’s all about spending the least they can to access pockets of demand, and first movers are already enjoying an advantage.