By Rusty Braziel

RBN Energy LLC

Last week we introduced a blog series from contributor Ann Davis Vaughan on condensates – the hydrocarbon mixture that is now being produced from tight oil shale plays in increasing quantities. That production surge is causing refiners and traders to scratch their heads figuring out the best uses and markets for condensate. We quickly found that our efforts to understand the condensate market were being hampered by definitions as varied as Lady Gaga’s outfits. Today we expand on Ann’s narrative for an episode to tie down some definitions.

What Makes A Condensate A Condensate?

Condensates are a group of hydrocarbons that don’t fit easily into mainstream product categories. In the blog “Neither Fish Nor Fowl,” we defined condensates as liquid hydrocarbons somewhere between crude oil and natural gas liquids (NGLs).  But now that we are getting into the nitty gritty, this is much too simplistic a definition for our purposes. The reality is that most condensates differ significantly from crude oils. And condensates are not like all NGLs – they are similar only to natural gasoline, the heaviest of the NGLs.

So what makes a condensate a condensate?  Here lies the heart of the problem because the term condensate can refer to a number of products made up of somewhat similar hydrocarbon compounds.

Lease Condensate

When most people talk about condensates they are referring to lease condensates, so defined because they are produced at the lease level from oil or gas wells. These condensates can be produced along with significant volumes of natural gas and are typically recovered at atmospheric temperatures and pressures from the wellhead gas production. These “raw” condensates come out of the ground as mixtures of various hydrocarbon compounds including NGLs, pentanes (C5s, so called because they have five carbons in the molecules), C6s (hexanes), and depending on the condensate, a menagerie of heavier hydrocarbons in the C7, C8 and even heavier range.

A lease condensate has an API gravity ranging between 45 to 75 degrees. Those with a high API contain lots of NGLs (including ethane, propane and butane) and not many of the heavier hydrocarbons. These condensates are clear or translucent in color. The condensates with a lower API gravity down at the 45 degree level look more like crude oil (black or near black) and have much higher concentrations of the heavier C7, C8 and heavier compounds. In between, a wide range of condensates are colored 50 shades of gray (We had to get that in there somewhere.)

The lighter condensates (higher API gravity) can be difficult to handle due to their high vapor pressure (see Regulatory Gas Pressure Party for an explanation of vapor pressure) and are usually stabilized ‘in the field’. This means they are run through a stabilizer which may be nothing more than a big tank that allows the high vapor pressure components (the NGLs) to vaporize and to be collected for processing as NGLs.  That leaves a stabilized condensate that has a lower vapor pressure which is easier to handle, particularly when it must be shipped by truck or rail.

Plant Condensate

We mentioned above that lease condensates are similar to natural gasoline, one of the five NGLs.  In fact, natural gasoline is sometimes called a “plant” condensate. The reason is that natural gasoline is made up of components similar to a middle-of-the-road lease condensate – lots of pentanes (C5s), some hexanes (C6s) and very small quantities of the heavier hydrocarbons.  Because natural gasoline is the product of a processing plant, its qualities (specs) are in tighter ranges than lease condensates. But both products can be used interchangeably in some markets, including crude blending and diluent for bitumen.

Light Naphtha

There is a third hydrocarbon product that is also somewhat interchangeable with natural gasoline and middle-of-the-road lease condensates, and that is naphtha, specifically light naphtha. Most naphtha is produced from crude oil in the first step of the refining process – distillation. We discussed distillation in our blog series on refining. (See Complex Refining 101 – Distillation). Light naphthas are made up mostly of C5s, C6s and portions of the heavier hydrocarbons.

Another source of naphtha is condensate. Condensates can be processed through a splitter (effectively a stand-alone, small crude oil distillation tower) that separates the naphtha range materials from lighter NGLs and heavier hydrocarbons to yield a clean naphtha product that can be used as both a feedstock for refinery upgrading processes and for the production of petrochemicals.

All of these product categories in the condensate family – lease condensates, plant condensates (natural gasoline), and naphthas are, in general terms, composed of the same hydrocarbon components. But only lease condensates are produced directly from the wellhead without further processing. This distinction turns out to be important when we get to the idiosyncrasies of the export rules for condensate.

But we are running ahead of ourselves so before we continue our series with the next blog from Ann on condensate exports, let’s just sum up what we need to remember from these definitions as we analyze the markets for condensate:

Lease Condensate: produced in the field as a liquid and unprocessed except for basic stabilization at or near the wellhead. Lease condensates have wide ranges of API gravities from 45 to 75 degrees. There is plenty of new lease condensate showing up at the Gulf Coast from production in the Eagle Ford and other shale basins (see our introduction to this series Fifty Shades Lighter – What Should be Done With Condensates).

Plant Condensate: a product of NGL processing plants essentially equivalent to natural gasoline. Since it comes from a processing plant, plant condensate is considered a processed product. Plant condensate production is increasing with the surge in NGLs from growing natural gas production that we have covered in a number of blogs (see for example Can Mont Belvieu Handle The NGL Surge).

Light Naphtha: similar in properties to middle-of-the-road lease condensates and natural gasoline, but produced by refinery distillation or the process of condensate splitting. Light naphtha is considered a refined product.

These hydrocarbon products have been used for years as feedstocks for refinery upgrading processes, for gasoline blending and as feedstocks for petrochemical processes, among other uses. The challenge today is to identify how the market will handle increasing volumes of lease and plant condensate. The answer to that challenge is partly wrapped up in the issue of which condensates may be exported and which markets they can go to. That’s where we are headed next as we rejoin Ann’s narrative to understand the condensate export market.



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