Stabilizer

A five-fold increase in crude oil production over the past three years has given the Eagle Ford basin an instant star on the shale walk of fame. Unlike other booming shale basins the Eagle Ford has not suffered from a lack of crude takeaway capacity. Instead it has suffered from the challenges presented by a high percentage of condensate output and varied crude quality. These challenges may be addressed by infrastructure and changes in the regulations surrounding export regulations. Today we introduce a new series updating our analysis of Eagle Ford infrastructure.

In 2010 Enterprise Products Partners signed a ten-year agreement with Pioneer Natural Resources to transport, process and market their crude, gas and liquids production from the Eagle Ford. Today that agreement seems to have put Enterprise in the catbird seat after the Department of Commerce softened rules governing the export of lease condensate.  Today in the second of a two part series we describe stabilizer capacity and export routes to market for Pioneer, Anadarko and ConocoPhillips in the Eagle Ford.

Just over a week ago (July 3rd) Reuters reported that Enterprise Product Partners (EPD) sold their first 400 MBbl export cargo of condensate to Japanese trader Mitsui. That export follows private letters from the Bureau of Industry and Security (BIS) to Enterprise and Pioneer that represent a change in the government’s interpretation of 40-year-old legislation banning the export of unprocessed crude and condensate from the US. The apparent relaxation of the rules could open up export opportunities for shale producers – especially in the wet gas / condensate window of the Eagle Ford in South Texas. Today in the first of a two part series we describe existing stabilizer capacity and export routes to market in the Eagle Ford.

The crude oil market was agog yesterday with a news story broken by the Wall Street Journal that the Department of Commerce Bureau of Industry and Security (BIS) had provided letters of ruling to Pioneer Natural Resources and Enterprise Products Partners that would allow these companies to export a limited amount of wellhead condensate starting in August. If these rulings are more than just trial balloons sent up by the BIS to test the waters then they contradict previously accepted requirements for processing condensate before it could be exported.  Depending on the yet-to-emerge fine print, these rulings could have a significant impact on US condensate exports as well as revenue prospects for those companies that have committed to throughput capacity at currently planned condensate splitters along the Gulf Coast. Today we navigate the nuances of the story.