Production of waxy crude in the Uinta Basin is up by more than half since mid-2021 and E&Ps there would like to produce more — the dense, slippery hydrocarbon is in high demand, not just by refineries in nearby Salt Lake City but also by at least a few of their Gulf Coast counterparts. Producers seem to have a handle on transporting increasing volumes of the stuff to market by truck and rail. The problem is, waxy crude emerges from Uinta wells with associated gas that needs to be piped away, the gas pipelines out of the play are nearing capacity, and addressing the takeaway constraints is a very complicated matter. In today’s RBN blog, we discuss the northeastern Utah play’s gas-takeaway concerns and the prospects for continued growth in waxy crude production.
In Part 1, we said that Uinta Basin production of waxy crude has been on a roll, increasing from about 80 Mb/d a year and a half ago to an estimated 130 Mb/d in recent weeks. The waxy crude produced in northeastern Utah has a number of unusual qualities, including medium-to-light API values (30 to 40 degrees for the Uinta’s “black wax” and 38 to 44 for its “yellow wax”); minimal levels of sulfur, acid, metals and nitrogen; and — most noteworthy of all, perhaps — the consistency of old-school shoe polish, which requires that it be kept warm to remain in a liquid state. The crude’s waxy consistency complicates its transport and storage. Insulated tanker trucks are used to move up to 80 Mb/d of the basin’s output to the five refineries in Greater Salt Lake; the balance (currently about 50 Mb/d) is trucked to one of two rail terminals south of the Uinta (Wildcat and Price River) for loading onto coiled and insulated railcars for shipment to terminals in Louisiana and southeast Texas for use by refineries there.
The sharp rise in waxy crude production since mid-2021 is tied to three key factors: (1) favorable oil prices; (2) major gains in production efficiency and economics (see Part 1 for details); and (3) growing interest from Gulf Coast refineries in incorporating waxy crude into their crude slates. As we said last time, Uinta E&Ps want to produce more, refineries in Louisiana and Texas want to buy more, and the obvious challenges related to transporting waxy crude to market are being managed and met.
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