Midstream firms build to meet Eagle Ford condensate production

With an $860 million deal announced this week, Buckeye Partners is betting on condensate.

Condensate, a type of light crude oil, has been flowing in increasing quantities from the Eagle Ford Shale in South Texas as technological advances boost production there.

And with more condensate coming from the region — as well as the possibility that lightly refined condensate may be exempt from a U.S. ban on most crude oil exports — many midstream companies are looking at potential profit in getting the light oil from the South Texas wells to market.

From 2009 to 2012, annual U.S. production of condensate from wells grew 54 percent, from 178 million barrels to 274 million, according to U.S. Energy Information Administration. By many estimates, the Eagle Ford region accounts for the majority of that production.

On Tuesday, Houston-based Buckeye Partners L.P. announced it would enter the heated market by paying $860 million for an 80 percent interest in Texas facilities owned by Trafigura AG. The deal includes gathering facilities in the Eagle Ford, as well as processing plants and a marine terminal in Corpus Christi.

Buckeye has been active in markets including Chicago, New York and the Caribbean.

Buckeye and Trafigura will run the assets as a joint venture and will contribute at least another $240 million to build new storage and seaborne shipping capacity in the near future, the companies announced.

Trafigura AG is a subsidiary of Netherlands-based commodities trader Trafigura Beheer BV.

Under the new deal, Trafigura will buy oil and condensate produced in the Eagle Ford before sending it to other markets...

Condensate is lighter than crude oil, but heavier than natural gas liquids. The issue with condensate in its natural form is that the lighter hydrocarbons can make it dangerous to store and transport. Therefore, stabilizing is required to allow the condensate to meet specifications. Often, the condensate is pumped to a sales storage tank, where it will flash off its lighter hydrocarbon components, which usually are captured through vapor recovery compression in order to prevent venting to the atmosphere, which results in lost revenues and potential emission issues.

Different operators process their condensate in different ways, based on their commercial considerations and operational preferences. Regardless, plant equipment has to be designed around a clear-cut basis, and preparations need to be made to make the project move as quickly as possible.

The U.S. Energy Information Administration describes lease condensate as “a mixture consisting primarily of hydrocarbons heavier than pentanes that is recovered as a liquid from natural gas in lease separation facilities.” This category excludes natural gas plant liquids, such as butane and propane, which are recovered at downstream processing facilities. Condensate nomenclature tends to be puzzling because different terms are sometimes used to describe the same thing, and in some instances, the same name is used to describe different compositions. An example of this is NGLs referred to as y-grade, plant condensate, natural gasoline, compression liquids, and cryogenic liquids, to name only a few.

One thing to note when referring to NGLs as natural gasoline is that there is also a product stream from an NGL fractionator that typically is composed of the pentanes and some hexanes from the fractionation process. Therefore, the term natural gasoline, when used with respect to a fractionator, will have a very specific definition. Field condensate, on the other hand, can be referred to as condensate, high API crude, oil, and drip. Most of these vary, depending on where one is located geographically and who he is talking to.

http://www.aogr.com/magazine/editors-choice/growing-condensates-require-optimized-designs-for-gathering-processing