Waxy and I Know It - Predicting the Uinta Basin's Productivity and Long-Term Staying Power

There’s a lot to like about the Uinta Basin’s waxy crude, but ramping up its production and use in refinery feedstock slates will require multimillion-dollar investments in rail terminals, special rail cars, heated storage, refinery equipment and other midstream and downstream infrastructure. A natural concern for E&Ps, midstreamers, and refiners is whether the basin has sufficient long-term staying power to justify the upfront costs and commitments. As we discuss in today’s RBN blog, a machine-learning-based analysis can provide many of the answers by assessing the basin’s long-term outlook under various scenarios. 

In Part 1, we explained that there are two flavors of Uinta waxy crudes: black wax, with an API gravity of 32 to 36 degrees, and yellow wax, with an API gravity of 38 to 44 degrees — both are desirable for a number of refineries. Waxy crude is, of course, highly paraffinic (great for making high-value lubricants); it also has amazingly low levels of sulfur and other impurities and yields desirable proportions of gasoil, kerosene, naphtha and other important refined products. And it can be blended with other crudes, albeit usually as only a small percentage of the mix. We also noted that IP rates in the heart of the Uinta are darn good, matching and even exceeding those in the best parts of the Permian.

The catch is that at ambient temperatures, waxy crude has the consistency of shoe polish in a tin, so it needs to be stored in heated tanks to remain in a liquid, pourable state. Then it needs to be raced in insulated tanker trucks either to refineries in the Salt Lake City area geared up to take the Uinta grades (130 miles to the west/northwest) for offloading into heated tanks or 80 miles to the south/southwest for transloading into expensive coiled and insulated rail cars, then on to distant refineries that have made the necessary investment to handle the Uinta barrels. During the subsequent multi-day, unit-train rail trip, the waxy crude is allowed to solidify. When a train arrives at its receiving point, steam is fed through coils in the rail cars to reheat the stuff for offloading into (once again) heated storage before it heads to refinery distillation and (for yellow wax) sometimes straight into a fluid catalytic cracking (FCC) unit.

Despite waxy crude’s need for special care and handling — it’s a talented but troublesome diva, the Mariah Carey of crude oil — production has been rising fast (now averaging 170 Mb/d) and so has demand from distant refineries and blenders, putting strain on existing midstream and downstream infrastructure and spurring talk of needed expansions. But as much as waxy crude market players — E&Ps, rail terminal developers, refiners and blenders — want Uinta Basin production to keep rising, they’re also wary of making big up-front investments to support that growth without having a clear understanding of the basin’s long-term prospects and, with that, a high degree of confidence their investments will pay off.

Today, we’ll try to help out on that front by describing the AI-based analytics our friends at Novi Labs use to:

• Understand the individual contributions of a wide range of geologic and operational variables to production levels in the Uinta’s two most extensively drilled layers or “benches.”
• Use that understanding to predict the performance of future wells in the two benches.
• Forecast the volumes of waxy crude that could ultimately be extracted from these benches at various price points.

As we said last time, Novi Labs’ primary focus — for now — is on the Uinta’s Green River Formation and, more specifically, the Uteland Butte and the Upper and Lower Castle Peak benches (dashed black oval in Figure 1 below), where Uinta producers have drilled hundreds of wells and which therefore offer the largest amount of geologic and operational data. (More on that in a moment.)

Uinta Basin’s Geologic Formations