| HOUSTON, July 16
HOUSTON, July 16 Plains All American may
build new pipelines dedicated solely to a very light form of
crude oil known as condensate in parts of the Permian Basin in
West Texas as output increases, an executive of the U.S. company
said this week.
Infrastructure in the Permian is playing catch-up to areas
like the Eagle Ford in South Texas, where such pipelines already
exist, amid changing regulations for exporting the oil.
The issue is more acute after the U.S. Commerce Department
told two prominent Eagle Ford operators that condensate could be
exported internationally if it has been run through a
stabilizer, a very basic form of processing that removes natural
gas liquids such as propane and other contaminants from crude.
Plains is considering new condensate-only pipelines and
storage tanks in the Permian's Delaware Basin if customers want
Condensate makes up much of the output from the prolific
Eagle Ford, where newer pipeline and storage infrastructure is
better suited to segregate it from more traditional light crudes
like West Texas Intermediate (WTI), Sam Brown, vice president of
pipeline business development for Plains, said on Tuesday at an
energy conference in Houston.
"There is ability to receive those segregated streams at the
terminals in Corpus Christi, and potentially Houston, so you can
basically segregate any condensate or processed barrel all the
way from the wellhead from a centralized facility to the dock,
to a ship," Brown said.
Before the government issued private rulings to Pioneer
Natural Resources and Enterprise Products Partners
, condensate was treated as crude under U.S. law and
banned from export unless companies obtained a special license.
The rulings opened the door to exporting minimally processed
condensate because it qualifies as a refined product.
Brown said the industry was seeking more clarity on what
needs to be done between the wellhead and the export dock.
"It's a work in progress," he said, "and we'll have to see
what we can do to meet the criteria the government's going to
allow to export this product."
Permian output has traditionally been WTI and West Texas
Sour (WTS), Brown said. Permian output is getting lighter, with
more condensate in the production, he said.
While condensate has traditionally been mixed with other
Permian crude as it moves to markets, midstream companies will
look at ways to segregate it as output volumes increase, Brown
Shipments on bigger, longer pipelines known as trunklines
that carry both regular crude and condensate would be "batched,"
or keeping each type of crude in its own separate shipment.
"I think you'll see more and more batching," Brian Melton,
vice president of pipeline marketing and business development
for BlueKnight Energy Partners, said on Wednesday. "We
think you'll see more pipeline competition, and you'll see more
and more of an ability to do a batched system."
(Reporting by Kristen Hays; Editing by Jessica Resnick-Ault and
Lisa Von Ahn)