Texas crude quality checks rise after excess metal found in oil export

Gibson Energy

15/11/2023 06:30

By Arathy Somasekhar
       HOUSTON, Nov 15 (Reuters) - U.S. oil pipeline and export
terminal operators are stepping up quality checks after finding
an out-of-specification cargo that raised worries of excess
metals contaminating Texas shale oil, operators and sources
said.
    WTI Midland, the crude from the top U.S. shale field which
joined the Dated Brent index in June, increasingly is flowing to
European refiners. Concerns that contaminated oil could damage
refining units and the oil's reputation spurred more routine
testing, people familiar with the matter said.
    Oil index publisher S&P Global Platts added WTI Midland to
the Dated Brent Index and set a quality standard for the crude.
Its testing has found only one out-of-specification cargo among
this year's 54 trades, a spokesperson said.  
    WTI Midland crude flows to Europe have set the price of
widely used Dated Brent on more than half the trading days since
May, according to price reporting agency Argus, putting more of
the U.S. crude in the hands of European refiners.     
    But high levels of iron and vanadium metal in oils blended
into WTI Midland can damage European refineries, which typically
have less complex processing units and are unable to filter the
metals.
    U.S. pipeline companies and crude marketers often mix more
expensive WTI Midland with cheaper varieties such as West Texas
Sour, Domestic Sweet or Eagle Ford to boost profit margins.
Those cheaper grades often contain higher levels of iron,
vanadium and nickel. 
    
    MONITORING SYSTEM
    Oil pipeline and terminal operator Enterprise Product
Partners  EPD.N  said it has developed a system to monitor its
crude input to ensure the oil sold as WTI Midland meets
specifications that mirror Platts.         
    "Every WTI cargo we've loaded has met the Platts Dated Brent
specs. That is over 100 cargoes of crude," Co-Chief Executive
Officer James Teague said in October.
        Energy Transfer  ET.N  earlier this year discovered an
out-of-spec batch of WTI Midland, Executive Vice President Adam
Arthur told an industry event in Houston in June. The company
declined to comment further.
    ONEOK Inc  OKE.N , which bought Magellan Midstream last
month, is trying to ensure the WTI Midland crude it exports is
separated from other pipeline streams, one of the people
familiar with the matter said. ONEOK declined to comment.       
     
    Pipeline firm Enbridge  ENB.TO , which operates an oil
export terminal near Corpus Christi, Texas, has stepped up
quality checks, but has not identified any issues to date, the
company said.
    
    WTI BLENDS 
    Despite the checks, "there are definitely lower quality
barrels that are getting marginally blended into export WTI in
Midland and elsewhere," a third person said.      
    Platts requires oil provided to the Dated Brent Index be
unblended crude transported from the Permian on specific
pipelines and exported from one of 11 terminals. It also limits
how much minerals and metals can be present.
    It has not removed any export terminals from the approved
list for not meeting its specification, a spokesperson said.
    Other companies with approved oil export terminals,
including Pin Oak, Flint Hills, Gibson Energy  GEI.TO , did not
respond to requests for comment. Plains All American  PAA.O  and
EPIC declined to comment.
    Traces of Vanadium and iron present in WTI crude at an
Enterprise's Houston storage terminal fell in September and
October from June, data posted on the company's website showed.
    It did not publish the data in July and August while it was
scrutinizing and tightening quality controls, one of the people
said. 
    "Some pipelines originating in the Permian (oilfield) are
getting a reputation for having higher metals content," said oil
consultant Brett Hunter, of Energy Hunter LLC. "We expect more
robust quality programs, and more frequent testing." 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Surging U.S. crude oil exports disrupt European, Asian prices   
 https://www.reuters.com/business/energy/surging-us-crude-oil-exports-disrupt-european-asian-prices-2023-08-04/
Adding U.S. WTI crude to Brent benchmark has gone well, ICE says
   https://www.reuters.com/business/energy/adding-us-wti-crude-brent-benchmark-has-gone-well-ice-says-2023-11-07/
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Arathy Somasekhar in Houston; Editing by Richard
Chang)
 ((arathy.s@thomsonreuters.com; +1 832 610 7346; Twitter:
@ArathySom;))