HOUSTON (Reuters) - A very light form of crude oil known as condensate makes up an increasing amount of U.S. shale crude output, but North American demand for it is limited because too much can overwhelm refinery distillation systems. Starting in 2012, several companies announced plans to build facilities that "split" condensate into various products, such as unfinished distillates and naphtha, which is used to make gasoline or dilute heavy crude, to export or sell domestically.
So far about $1 billion in condensate splitter projects have been built or are under construction, with another $715 million to $1 billion or more planned, though some may be scaled back or dropped. The oil price rout squeezed discounts of condensate and U.S. crude to global crudes, siphoning price advantages of the cheap feedstock.
Also, this month's lifting of the decades-old U.S. crude export ban allows any crude to be shipped to international markets without restriction. Before, most crude and condensate had to undergo at least some processing to qualify as an exportable refined product.
Last year U.S. regulators softened the ban, allowing companies to export even more minimally processed condensate that had been run through a stabilizer, which removes natural gas liquids but does not make fuels. Some midstream players forged ahead with splitters, having secured long-term contracts with companies to buy and market all the output, while others held back as oil output slowed on lower prices. Some considered building cheaper stabilizers instead.
Of the three that started up this year, two are operated by Kinder Morgan Inc at the Houston Ship Channel and BP Plc has a 10-year deal to buy all the output from both units. Buckeye Partners LP has a similar take-or-pay deal with Trafigura, its 20 percent partner in a newly commissioned splitter at their Corpus Christi terminal.
Magellan Midstream Partners has a similar deal with Trafigura for another 50,000 bpd splitter in Corpus Christi slated to start up next year, as does Targa Resources Partners LP with Noble Group Ltd, though Targa and Noble may opt for a new terminal with or without a splitter. Privately-held Centurion Terminals also has a long-term deal with a U.S. crude marketer to buy 70 percent of the output from splitters planned for its Brownsville, Texas terminal.
Other companies like Castleton Commodities International and Phillips 66 either do not have or have not announced partners for potential splitter projects. Martin Midstream Partners had said the company was veering from a splitter to a 50,000 bpd, $200 million stabilizer, but now no processing is necessary to qualify crude for export.
Here is a rundown of projects:
COMPANY NAME PROJECT LOCATION CAPACITY STATUS
('000 bpd)
Kinder Morgan Inc Two stand-alone Near Galena 100,000 bpd First 50,000 bpd
splitters, $436 Park terminal in two unit started up
million on the Houston phases; BP in March 2015;
Ship Channel Plc has a second in July
long-term 2015; May add
contract to another 50,000
buy all the bpd capacity
throughput
Magellan Midstream Stand-alone At its marine 50,000 bpd; Second half
Partners LP splitter, $250 terminal in Trafigura 2016; expandable
million Corpus [TRAFGF.UL] to 100,000 bpd
Christi, TX has a
long-term
take-or-pay
agreement to
buy the
throughput
Buckeye Texas Stand-alone At the 50,000 December 2015;
Partners LLC; joint splitter, with partnership's had begun
venture of Buckeye 900,000 barrels marine commissioning as
Partners LP with 80 of crude and terminal and of Sept. 16,
percent interest, products storage storage 2015
and Trafigura with an complex in
[TRAFGF.UL] with 20 additional 1.4 Corpus Christi
percent interest million barrels TX
of condensate
tankage to be in
service 1Q 2016
Centurion Terminals Two distillation Port of Initially Terminal under
LLC towers and a Brownsville, 50,000; construction,
third to be added Texas; also 10-year startup 3Q 2016
at new export 1.5 million contract with
terminal under barrels of undisclosed
construction; storage shipper to
cost undisclosed capacity and buy 70
room to percent of
expand; rail splitter
terminal that output
can offload up
to 160,000 bpd
of Delaware
Basin
condensate
Marathon Petroleum Reconfigured At 242,000 bpd Catlettsburg Canton December
Corp distillation Catlettsburg 35,000 bpd; 2014;
towers to be KY and 80,000 Canton 25,000 Catlettsburg May
splitters at two bpd Canton OH bpd 2015
refineries; $250 refineries
million
Castleton Stand-alone Corpus Christi 100,000 Construction had
Commodities splitter and bulk been slated to
International petroleum start in 2015,
terminal with delayed to
storage tanks and mid-2016; U.S.
barge loading Environmental
operations that Protection
can handle Agency issued
500,000 bpd of air permit in
crude condensate September 2014.
for export; also
will produce
diesel, jet fuel,
naphtha and other
petroleum
products; $400
million
Targa Resources Stand-alone Targa's 35,000 bpd; Awaiting
Partners LP splitter, $115 Channelview Noble Group permits, will
million terminal on Ltd has a start up in late
the Houston long-term 2016 or 2017 if
Ship Channel agreement to build; Targa and
buy the Noble may
throughput instead opt to
build out
Targa's new
Patriot terminal
on the ship
channel to add
significant
storage and
potentially a
liquid petroleum
gas export
facility
Martin Midstream Had explored a Corpus Christi 50,000 to Construction
Partners stand-alone terminal 100,000 for estimated to be
splitter in splitter, no 24 to 30 months,
engineering and capacity could be shorter
design phase, disclosed for for a
estimated cost potential stabilizer; no
$200 million to stabilizer money will be
$500 million spent until a
depending on firm contract is
size; on hold as reached with a
customers explore partner or
exporting lightly partners
processed
condensate
Phillips 66 New splitter at At 247,000 bpd N/A Filed for
Texas refinery; Sweeny TX construction
in preliminary refinery permit with
engineering Texas regulators
phase, no cost in October 2014,
disclosed final approval
to be considered
later, depending
on customer
demand
Cheniere Energy Inc Straight-run and San Patrico 100,000 total Awaiting
stabilization hub near crude and permits, seeking
capacity with Corpus Christi condensate commercial
initially million TX; to connect with 60,000 agreements, to
barrels of via pipeline of make final
storage and a to liquids stabilization decision to move
five-bay truck terminal at capacity; forward with
rack; $550 Ingleside, TX, expandable project;
million initial to have 2 with commercial
investment; nixed million additional operations
splitter in barrels of dock space, slated for 2017
mid-2015 storage and a storage and
truck rack; pipelines
exports would
load onto
ships at
Aframax-capabl
e marine dock
infrastructure
Oiltanking Partners Potential Beaumont, TX N/A N/A, Oiltanking
LP acquired by splitter or terminal had been in
Enterprise Products stabilizer; no discussions with
Partners in November cost disclosed customers about
2014 project's
viability before
mostly acquired
by EPD, which
has said may
consider a
stabilizer
Sources: Company presentations, conference calls, announcements, analyst reports
(Reporting by Kristen Hays; Editing by Terry Wade and Diane Craft)