Where're You From, You Waxy Thing, Part 2 - Uinta Basin’s Gas-Egress Dilemma Clouds Forecast

Times are good indeed in the Uinta Basin in northeastern Utah, where one of the world’s most unusual — and, in many ways, most desirable — crude oils is being produced with increasing efficiency and in fast-rising volumes. Yes, production of the Uinta’s trademark waxy crude is up by more than 50% in the past year and a half, to record-shattering levels, and demand for the dense, slippery hydrocarbon, with its minimal sulfur content, next-to-no impurities and favorable medium-to-high API numbers, is up too. Waxy crude may be a pain in the butt to transport and store — it needs to be kept warm to remain in a liquid state — but it is a staple at the five refineries in nearby Salt Lake City, and at least a handful of Gulf Coast refineries want as much of the stuff as they can get their hands on because of its desirable qualities. But without infrastructure enhancements, there may be limits to how much Uinta production can grow from here, as we discuss in today’s RBN blog.

The Uinta Basin in northeastern Utah, which may be the quirkiest production area in the Lower 48, is firing on all cylinders. Production of the basin’s unique waxy crude is at an all-time high, the natural gas takeaway constraints that had threatened to limit growth are being resolved, and demand for waxy crude is on the rise. In today’s RBN blog, we’ll provide an update on the Uinta, where the crude looks and feels like shoe polish and is trucked and railed — not piped — to market. 

There’s a lot to like about the unusual, waxy crude oil produced in the Uinta Basin in northeastern Utah. Low production costs, minimal sulfur content, next-to-no contaminants, and favorable medium-to-high API numbers. Oh, and there’s plenty of the stuff — huge reserves. The catch is that waxy crude has a shoe-polish-like consistency at room temperature, and has to be heated into a liquid state for storage and transportation. As you’d expect, refineries in nearby Salt Lake City are regular buyers; they receive waxy crude via insulated tanker trucks. They can only use so much though. Lately, a couple of Gulf Coast refineries have been railing in occasional shipments of waxy crude, but getting it onto heated rail cars involves a white-knuckle tanker-truck drive across a 9,100-foot-high mountain pass to a transloading facility. Now, finally, crude-by-rail access from the heart of the Uinta is poised to become a reality, offering the potential for much easier access to distant markets and, possibly, a big boost in Uinta production. In today’s blog, we provide an update on waxy crude and its prospects.