US condensate exports rise, supporting light sweet

OREANDA-NEWS. Export of condensate from the US have been on the rise after nearly disappearing in late 2014.

Five tankers have been booked for April-loading of lightly processed condensate to be exported out of the US, although one was canceled. This compares to three booked loadings in March, one in February and two in January, according to fixture reports.

The four April bookings are equal to about 2.48mn bl. March data is not yet available but In February the US exported just over 1.2mn bl of condensate and in January it was 2.5mn bl, according to the US Energy Information Administration.

BP, Koch, Castleton Commodities, CNR, Vitol, Mitsubishi and Westport have all shown up in shipping fixtures booking ships for condensate exports.

Given large discounts between US marker West Texas Intermediate (WTI) and Ice Brent, condensate exports will likely continue and will increase from levels seen in February.

A growing number of companies are gaining approval from federal regulators for exports, along with those choosing to self-certify alongside new infrastructure. This should continue to grow volumes available for export as long as market conditions allow.

Enterprise Products Partners, Shell, BP, BHP Billiton, Trafigura, Nustar and Cheniere Energy have started to export US condensates or are developing plans to do so. Plains' stabilizing process has also been approved for export.

Plains is expanding its 80,000 b/d stabilizer in Gardendale, Texas, to 120,000 b/d. NuStar Energy aims to export condensate by the end of the year via its South Texas pipeline system. The company is building 400,000 bl to 800,000 bl of storage in Corpus Christi, Texas, in part for condensate exports.

ConocoPhillips has condensate processing facilities in Kenedy, Texas, totaling 105,000 b/d and a 30,000 b/d unit near Pawnee, Texas. The company recently stated they are considering condensate exports.

Kinder Morgan's 50,000 b/d splitter came online in March, and another 50,000 b/d unit is slated to start up in July. Kinder made a supply agreement with BP regarding the stabilizer.

With US light sweet crude volumes growing and refiners already running as much light sweet as they can, condensate exports can keep prices of domestic light sweet grades in line with those in the rest of the world. Prior to the approval of condensate exports, light sweet differentials had to weaken in order for volumes to find domestic homes.

Now, when light sweet prices weaken relative to international prices, condensate exports can increase, thereby filling the gap between domestic supply and demand, rather than filling the gap through a downward price adjustment.

Louisiana Light Sweet (LLS) had tended to a discount to international marker Ice Brent for all of 2014, for an average discount over the year of about \$3.15/bl and a maximum discount of about \$7.60/bl.

So far in 2015, LLS has averaged a discount of \$1.85/bl to Ice Brent with a maximum discount of \$6.15/bl. Concurrent LLS averaged a discount of \$3.85/bl to Ice Brent in April 2014, compared to a discount of 35?/bl so far this April.