Factbox: US condensate splitter projects

HOUSTON: A very light form of crude oil known as condensate makes up an increasing amount of US 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 US crude to global crudes, siphoning price advantages of the cheap feedstock.

Also, this month’s lifting of the decades-old US 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 US 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 US 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.

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