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Don’t Fear the (Catalytic) Reformer – Changes in the US Reformate Market

Reformate is a blending component that makes up about 30 percent of US gasoline supplies. It is also an important source of aromatics used as feedstocks for the petrochemicals industry. Ongoing changes in the US crude oil slate are reducing the volume of heavy naphtha available to feed catalytic reformer units that make reformate. At the same time better economics for lighter ethane feedstock are reducing the volume of aromatics produced as byproducts of olefin cracking. The result is a shortage of the aromatic materials used to produce a number of petrochemical intermediates such as polymers and fibers. But more changes are coming to the reformate market due to reductions in the use of reformate in gasoline.  Today we look at the changing role of reformate.

Through the Looking Glass Part 2: Condensate Markets East of Suez

By Al Troner, President Asia Pacific Energy Consulting (APEC)

Historically U.S. condensate production has been in the backwater of crude markets, dumped into local crude flows or more recently exported to Canada for use as heavy crude diluent.  In stark contrast, the separation and processing of condensates in East of Suez markets is a major downstream activity, accounting for much of the Mideast Gulf’s naphtha exports and Asia’s feedstock supply.  As U.S. condensate production increases, it is clear that new markets will be needed for the volumes – with suppliers eyeing those robust East of Suez destinations. Today we continue our blog series on international condensates examining splitter/processing capacity in the Middle East and Asia Pacific regions.

Is The Price of Freedom Too High? Kinder Morgan’s Crude Pipeline to California Part 2

The proposed $2 Billion Kinder Morgan Freedom pipeline project is conducting an open season for shipper commitments from West Texas to California. The California refining market has long operated like an island within the US and has so far received few supplies from new domestic production. To proceed with the project Kinder need shippers to make long term commitments but today’s unsettled markets place a premium on flexibility. Today we conclude our two-part analysis of the chances that the pipeline will get built.

(Turn around) Every Now and Then They Need a Little Bit of Maintenance – How Refinery Repairs Impact Exports

Gulf Coast diesel crack spreads (the margin between diesel prices and Light Louisiana Sweet crude - LLS) are averaging just under $16/Bbl this year – about 75 cnts/Bbl lower than 2012 but still pretty healthy. Gulf Coast diesel exports increased by 25 percent in 2012 – mostly to meet increased demand in Latin America. By December Gulf Coast refineries were running at 95 percent capacity to meet export demand. Yet during the first 2 months of 2013 refinery utilization plummeted to 80 percent, diesel production fell and Gulf Coast diesel exports dived by 300 Mb/d. Today we describe the impact that a heavier than usual Gulf Coast refinery repair season had on product exports.

Crude Loves Rock’n’Rail - Gulf Coast Destinations – The Ship Channel

By the end of 2014 an additional 1.7 MMb/d of pipeline capacity will open up from the Midwest and the Permian basin – bringing crude into the Texas Gulf Coast region. A good deal of that crude will pass through pipelines and/or storage in the Houston Ship Channel area. Ordinarily all that pipeline capacity should trump crude-by-rail due to lower transport costs. But the onslaught of rail could change the game, as over 200 Mb/d of new rail capacity is being built in the Channel area Today we discuss the logic of crude-by-rail in Houston.

Deep Within My Heart Lies a Refinery – A Plant in ole San Antone

Owning a refinery in the middle of the fastest growing shale crude basin sounds like a good idea. Calumet Specialty Products LP thinks so – they purchased the 14.5 Mb/d San Antonio refinery in December 2012 located at the heart of the Eagle Ford. Since then Calumet has set about expanding production and organizing more efficient crude transportation. But owning such a small refinery near the largest refining region in the world has its risks. Today we describe how location and crude supply advantages help keep this refinery competitive.

Like A Box of Chocolates – The Condensate Dilemma – Part 2 Demand

Supplies from the three main branches of the US condensate family are increasing faster than demand can keep up. Field condensate production from shale basins is nearing 1 MMb/d - headed to 1.6 MMb/d by 2018. Plant condensate – aka natural gasoline - will increase from just over 0.3 MMb/d in 2013 to more than 0.5 MMb/d in 2018. Because field condensates cannot be exported to overseas markets, more of this material will be refined traditionally or using a splitter – pushing out existing refinery demand for natural gasoline and creating an excess of naphtha range material. Petrochemical demand for natural gasoline has dried up in the face of cheap ethane feedstocks. Canadian demand for natural gasoline as diluent will soak up some but not the entire natural gasoline surplus. With US gasoline demand declining, the only outlet for excess naphtha and natural gasoline will be more exports (beyond Canada). Today we look at changing condensate demand patterns.

Do Ya Think I’m Waxy? Alternate Routes to Market for Uinta Basin Crudes

Rising Uinta crude production will run into a refining capacity ceiling unless new routes to market are developed. The distinctive black and yellow waxy crudes produced in Utah are largely refined locally in Salt Lake City refineries because of the challenges transporting them. However new refineries, rail load terminals and even a heated pipeline are all being planned to increase takeaway capacity to absorb growing production. Today we continue our analysis of Uinta Basin crudes.

Do Ya Think I’m Waxy? – Handling Expanding Uinta Basin Crude Production

The strange looking yellow and black waxy crudes produced from the Uinta Basin in Utah since the 1950’s resemble shoe polish at room temperature. Because of the complexity of transporting these waxy crudes over long distances, they have traditionally been consumed by close by Salt Lake City refineries. However, just like many other US production basins these days, Uinta production is increasing – up from 53 Mb/d in January 2011 to an estimated 88 Mb/d this month (August 2013 - source Bentek). Continued production expansion depends on finding new refining capacity or routes to distant markets. Today we begin a series on crude from the Uinta Basin.

Reunited? Stronger WTI Moves Closer to Brent

The West Texas Intermediate (WTI) discount to Brent has been as wide as $27/Bbl in the past two years and traded at an average of $17.50/Bbl in 2012. Since February this year the spread has narrowed 80 percent to less than $5/Bbl – closing at $4.55/Bbl on Friday (July 5, 2013). Surging WTI prices are over $100/Bbl for the first time since May 2012.Today we look at what is behind the recent sudden narrowing in the spread.

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