Industry News Archives - Page 2 of 3

As shipping costs surge for domestic crude producers, remove H2S with Pro3® to upgrade your barrel

A result of lost capacity in Saudi Arabia

Chartering of very large crude carriers, or VLCCs, to ferry oil from the US Gulf Coast to Asia has increased $5 a barrel. This is about twice the price before the attacks in Saudi Arabia. The increase has raised the price of US oil sold overseas at a time when Japan, South Korea and India are replacing the lost deliveries from Saudi Arabia and increasing their stockpiles to buffer against further supply disruptions.

Added tanker shortage by retrofitting ships

Timing for the increased US oil demand is being further complicated. The heightened tanker demand is meeting a shortage of available ships given that many are in harbor being retrofitted to comply with new international emission standards that will go into effect in 2020. The higher transport cost of US oil threatens to send buyers elsewhere, reducing US crude exports.

US crude exports at risk

A tanker at the Port of Corpus Christi, Texas. The cost of chartering a tanker to ship crude across the ocean has continued to soar after the attacks in Saudi Arabia. PHOTO: EDDIE SEAL/BLOOMBERG NEWS

Why High Shipping Costs Hurt Domestic Crude Producers Most

South Korea has been the largest buyer, importing 605,000 barrels a day from the US. This is 20% of all US crude exports. The increased shipping costs could really hurt domestic drillers already facing lower prices while buyers such as South Korea diversify to buy oil from the North Sea, West Africa and Brazil. Michael Tran, an analyst with RBC Capital Markets said: “If it becomes uneconomical to ship US barrels to Asia, that essentially leaves barrels stranded in the US.”

Pro3® non amine H2S scavenger can help

While it is expected that the VLCCs being retrofitted will be able to service the market quite soon, it is as important as ever to maximize the value of your barrels. Contact us now to discuss how we can help you with our Pro3® so that you can get more for your barrel. Our Pro3® is a non-amine H2S scavenger that helps producers and traders maximize the value of their barrels in three ways: We upgrade the quality of oil when getting rid of the H2S content, we increase security for workers and communities when controlling H2S, and we protect infrastructure and equipment by avoiding corrosion while eliminating H2S.

Saudi Arabia drone attack, the SPR and the importance of H2S removal with Pro3®

Drone Strike on Saudi Oil Facility Shakes Global Supply

Saudi Arabia’s all important Abqaiq processing facility was attacked with drones over the weekend shutting about 5% of global crude output as shown on Figure 1.

Global Oil Prices Surge After the Attack

Oil prices already surged while Saudi Aramco’s sources declared that it might take months for Saudi oil production to return to normal. This is a game changer for crude prices. West Texas Intermediate crude for October delivery (CLV19) was up 11.5% on Monday. On at $61.18 a barrel, hitting a session high of $63.34 a barrel. Brent crude prices for November delivery (BRNX19.L) the global benchmark, initially shot up 18% as trading began late Sunday. That gain pared to a rise of $7.16, or 12%, to $67.42 a barrel on Monday.

Figure 1. Extent of damage to Saudi Arabia Abqaiq infrastructure. Source: U.S. Government/DigitalGlobe, via Associated Press.

International Community Responds to Outage

The giant Saudi plant that was struck cleans crude oil of impurities, a necessary step before it can be exported and fed into refineries. The attack cut Saudi output by 5.7 million barrels a day, or around half its production. Big countries such as the United States and China have reserves designed to handle even a major outage over the short term. President Trump already announced that he would release US emergency supplies and producers around the world said that there are enough reserves to make up for the shortfall.

Long-Term Risks for Global Oil Markets

However, traders worry about the long-term price increase in oil to reflect how global supply can be hit sharply, overnight, and without warning. The vulnerability of the Middle East facilities and the sudden elimination of spare capacity have been exposed during these unstable times in the region as shown in Figure 2. Similarly, the broader market will assess how fast other suppliers can respond to the oil shortage and it is important to watch how quickly America’s shale can ramp up.

Figure 1. Extent of damage to Saudi Arabia Abqaiq infrastructure. Source: U.S. Government/DigitalGlobe, via Associated Press.

Can the SPR and Producers Meet Global Demand?

The flexibility of existing producers to increase output and put to work spare capacity is being tested under the current conditions. Additionally, the capacity to extract the oil stored by the Strategic Petroleum Reserve (SPR) and treat it quickly will also determine how fast the market recovers from the drone attack and its long term effect on oil prices.

Q2 Technologies Supports Emergency H2S Removal

Q2 Technologies regrets the damage on Aramco’s facilities and is ready to help treat oil to remove H2S with Pro3®. Contact us today to discuss how we can help you treat any stored stocks or how to treat your oil at the wellhead.

Q2 Technologies has specialized in providing solutions to remove H2S from crude oil and natural gas for over 30 years. Until 2014, Q2 Technologies was elected as the subcontractor responsible for H2S removal technologies in the SPR. Q2 Technologies has helped American producers export billions of dollars worth of crude oil by removing hydrogen sulfide. Through industry collaboration America can help the world economy recover from this terrible attack. The new Pro3® chemistry is an important contribution to the industry as it addresses hydrogen sulfide issues as well as the operational concerns triggered by traditional triazine scavengers.

Let’s Work Together to Strengthen the Industry

Now is the time for everyone in the industry to work together and recover from this unfortunate blow. Visit Feedspot for other Oil and Gas blogs and learn what they are doing during this terrible time.

Join us for the first COQA H2S Mitigation Panel, NOLA March 14th!

Join us for the H2S Mitigation Panel on March 14th in New Orleans during the Crude Oil Quality Association Annual Spring Conference at the Hilton Riverside (COQA-NOLA). Hugo Lozano from Q2 Technologies will join other industry experts to share insights and experiences treating crude oil to remove H2S.

Key Topics Covered

The panelists will explore the key topics when dealing with H2S in crude oil:

The relative risk and mitigation priorities in production, gathering, pipelining and refinery operations.
H2S testing methods, interpretation and reporting.
Tracking H2S treatment and documentation methods.
H2S Mitigation techniques (physical and chemical alternatives).
Tracking chemical additives effectiveness and dosage excess signals to watch for.

Interactive Q&A Session

Attendees will have the opportunity to participate in a Q&A session to further dig in specific H2S handling situations. We at Q2 Technologies look forward to meeting with you to discuss how we can help you get more for your barrel and tackle H2S effectively.

The oil industry in perspective: A brief review of the Argus Americas Crude Summit

If you are an active participant in the oil industry, it is highly likely that you attended the Argus Americas Crude Summit Jan 22-24th. and that we had a chance to catch up. However, it is always convenient to stop and think about what we learned at a conference. Whether you were there or you missed it this time, there are four key ideas that will be helpful for us all as 2019 continues to evolve:

Regarding the production of oil in the US and its role as an exporter

It is well known by now that the nation has become a major player in oil production and export. What is new? Though China did stop buying US oil, exports continue to grow as seen on Figure 1 and new markets in South Asia are being developed. This area is where most new oil demand will be located.

Regarding the pipeline network in America

Regarding the infrastructure challenges faced by US producers to reach the market, there have been great advances. The bottle necks that kept prices down for WTI have mostly been removed and the continued expansion of the pipeline network has brought more players, more competition and new opportunities. Some of the new developments are the building of offshore oil loading terminals and the adaptation of facilities to serve supertankers. This is needed as pipelines from the Permian Basin and Eagle Ford Shale are nearing completion to move record amounts of crude oil and natural gas liquids to destinations along the Gulf Coast. Figure 2 shows the existing Gas Transmission and Hazardous Liquid Pipelines in the US, as can be seen, there is an extensive network which will continue to grow and adapt to market needs.

Figure 2

Regarding US refining capacity

There are important MARPOL VI implications for oil markets, mostly disruptions in the market, though most US refiner margins will improve. However, sour products and crudes will fall in value. Q2 Technologies can help sour crude producers to increase the value of their barrel with the Pro3® non amine H2S scavenger. In addition, US refined products export growth is expected to continue. Mexico and the rest of Latin America have increased their demand of US gasoline and diesel as you can see in Figure 3.

Figure 3

Regarding volatility drivers

It is important to consider the expectations in the current climate of instability within the US and elsewhere. The trade tensions with China, the instability and risks in Venezuela, and the power balance with Russia, another key worldwide oil exporter who has acquired a larger role in the geopolitical arena, bring uncertainty. Similarly, the glitches in developing infrastructure in the US, the governmental and regulatory possibilities, as well as the potential slowing global growth contribute to the wealth of variables that impact the oil industry. With so many variables, it continues to be valuable to attend to events like the Argus Americas Crude Summit to gain insight and better plan our own business strategies.

Let’s Talk: Improve the Value of Your Barrel

Join Us for the 11th. Argus Americas Crude Summit January 22 – 24

Join us and 400 others at this very special industry conference at the Hilton Americas in Houston from January 22nd. through the 24th. Q2 Technologies is one of the proud sponsors of this unique opportunity to gather insight on our fast-moving oil industry for 2019.

Hear industry speakers share their perspective on the global crude market, including:

The impact of increasing US crude exports, Marpol 2020 regulations and global demand growth
Future infrastructure and pipeline developments from the Permian and investment in US Gulf coast export infrastructure
Geopolitical uncertainty and the impact on global trade flows
Hot spots – developments in Venezuela, Mexico, Iran and more
Canadian crude market and pipeline constraints
Outlook on global crude demand in the short and long-term
OPEC developments and counterbalancing the market

We expect to see you there to tell you about how we can help your business. Learn about our Pro3® -non-amine H2S sour crude scavenger and its advantages. Make sure you check us out on the conference booklet and contact us to find ways to get more for your barrel.

What is Non-Triazine Treatment?

Even though triazine is a well-trusted solution, many companies have chosen non-triazine-based scavengers as alternatives for use in crude oil applications. One of the main characteristics of our non-triazine product, Pro3®, is a non-amine and non-glyoxal technology, making it safe for refineries and pipelines. If left unchecked, Amine salts that form from spent triazine can ultimately cause damage to the top stacks of a refinery when heated to >500 °F. Many refiners in the US Gulf Coast and overseas monitor amine content and require traders and midstream companies to use vetted non-triazine chemistries.

Advantages of Non-Triazine H2S Scavengers

Producers and Midstream companies alike have found success with our non-triazine products:

The quality of the oil is upgraded when H2S content is reduced.
Safer environment for all personnel on-site.
Infrastructure and equipment will last longer now that corrosion caused by H2S has been neutralized.
Our non-triazine scavengers are not based on commodity-priced products, so our prices are protected and are less impacted by external factors such as freezes and industrial raw material shortages.

Field Results and Performance

Our non-triazine H2S removal technology has proven to reduce chemical use up to 50-75% as compared to triazine. This definitely does not mean that triazine should always be replaced by non-triazine, rather, Q2 Technologies can assist you from a technical, engineering, and commercial viewpoint. Each application is different and needs to be carefully analyzed to determine the treatment product.

Triazine vs. Non-Triazine: Key Considerations

In conclusion, both triazine based H2S scavenger and-non triazine H2S scavenger options have their benefits and are the go-to alternatives for oil and gas treatment. However, one may be better than the other depending on the specific characteristics of the product that needs to be treated. For more information on triazine-based scavengers for natural gas operations, check out our detailed overview here. If you’re looking for the right H2S scavenger solution for your company, feel free to contact us! You can also read more about how switching to Pro3® can be the game-changer for your operations in our detailed comparison of triazine versus non-triazine treatments here

Sources:

https://www.sciencedirect.com/science/article/abs/pii/S1875510017304559

Time for WTI-Houston to Become the Global Oil Price Benchmark

Why is there a difference among oil prices from different regions? Why has the Brent crude been the traditional benchmark?

There is a growing trend from analysts highlighting the decreasing importance of North Sea crude (BFOE) to reflect the true global oil benchmark. Production in the North Sea has been declining as production in the US has boomed. The shale revolution across the United States from West Texas, Eagle Ford and Bakken has pushed the United States to become a net exporter of crude oil. US refiners continue to import heavy crude as the refineries were designed to process heavy crude from Canada, Mexico, Africa, Saudi Arabia and Venezuela. The wave of light sweet crude oil from the national shale plays was unexpected for USGC refiners.

Figure 1: Crude Oil Production from Permian Basin vs. Output from BFOE Market, Monthly Data, 2010 to 2018

Figure 1 shows the dominance of Permian crude production over BFOE production. This figure excludes crude from the Bakken and Eagle Ford that is blended into West Texas Intermediate (WTI) grade crude.

How WTI-Houston Became a Market Leader

The increasing pipeline connectivity from West Texas into the Houston and Corpus Christi ports tied with increased terminal and dock capacity has opened the doors for WTI to be exported across the world and priced on the water. As the crude export ban in the US was lifted, the world markets gained access to an alternative light sweet crude oil that competes directly with Brent. 2018 marked the first year where US crude exports broke the 2 MMb/d mark. The globalization of US produced crude has also begun to highlight some inherent problems and vulnerabilities that the Brent price has compared to WTI.

What Is the WTI-Houston Benchmark?

The WTI-Houston benchmark has been gaining importance as crude exports surge. The Argus, WTI delivered to Houston spot-price assessment was launched in February 2015. The WTI-Houston price is derived from volume-weighted averages of trades during a trading day and are reported to Argus as a differential to the Commodities Mercantile Exchange’s WTI future contracts in Cushing. The price was assessed in the Magellan East Houston terminal that was receiving close to 500,000 bbl/d. The WTI assessment in Houston is now expected to use data from cargoes of more than 1 MMb/d as new pipelines reach capacity. The market for physical trading in the Gulf Coast has been very well connected historically with imports in excess of 3 MMb/d of crude giving way to transparency in trades and pricing. The fact that US producers are not constrained by output limits like OPEC countries has allowed the US to truly become the marginal barrel of oil supplier that impacts global oil markets.

Where WTI-Houston Is Priced and Why It Matters

The WTI Houston price is determined at an export gateway with high liquidity and transparency from pipeline trades compared to the limited liquidity of seaborne cargo markets. The adoption of WTI-Houston pricing would be a significant change in benchmarking history and would acknowledge the importance of US a marginal barrel supplier with market impacts worldwide.

How Q2 Technologies Adds Value to Export Crude

We at Q2 Technologies are here to help American oil producers maximize the value of their barrel before exporting by treating it with our Pro3® non amine scavenger to remove H2S. Contactus to discuss how we can help you. Also, learn more about ensuring compliance with the copper strip test at truck offload stations.

Mexico to Import US Crude Oil in November

Pemex Secures Bakken Crude Cargoes for Pajaritos Terminal.

The trading arm of Mexican state owned oil company Pemex, PMI, is closing on multiple Panamax cargoes of light sweet Bakken to be delivered in the Pajaritos terminal through early December. US oil production from the Bakken Formation coming from Montana and North Dakota is exceeding 1.2 million barrels per day.

Four separate contracts of 350,000 bbl are being signed and details have not been disclosed yet. This is the second attempt from Pemex to import crude after failing to award a tender in October due to timing and the price expectations originally set by the company.

Declining Olmeca Production and Regulatory Shifts Drive Change

Mexico has historically relied on its domestically produced oil to process in its refineries, but environmental regulators have imposed a sulfur limit on many of those refineries that would require more light sweet crude runs. Olmeca crude production has been trending downward, leaving little available for domestic consumption.

A Strategic Shift in Mexico’s Refining Approach

The tenders mark a turning point in an initiative developed more than three years ago for Mexico to begin importing light sweet crude from the US to balance out its increasingly heavy crude production.

How Q2 Technologies Supports Crude Optimization

We at Q2 Technologies can help you maximize the value of your barrel by treating your oil with our Pro3® non-amine scavenger to remove H2S. Contact us to discuss how we can help you.

Why Chinese tariffs on US oil are a concern

What Is the Importance of China in the US Oil Market?

China will increasingly become the destination of US oil exports. China, India and the rest of Asia are home to virtually all the anticipated growth in global oil demand. China is the largest customer for U.S. crude, importing about 363,000 barrels per day (bbl/d) in the six months ended in March. Thomson Reuters shipping data shows those exports have increased since, rising to an expected 450,000 bbl/d in July.

Why Is Chinese Demand for Oil Increasing Rapidly?

While there is a lot of hype about the US becoming an oil exporter, there has been less discussion about the importance of China as a market. China’s economic growth is well known. In order to satisfy the needs of its economy as it continues to develop, China is preparing itself with refining and petrochemical capabilities. However, the Chinese need to import the oil required to feed these plants. More than 3 million barrels per day new refining capacity is being installed between 2017 and 2020 in China, mostly by independent refiners meaning that by 2020 China will have a 16 million bbl/d refining capacity. In contrast, the refining capacity in the US in 2017 was 18 million bbl/d, having increased only slightly in the last year.

It is important to maximize the value of your barrel before exporting your oil by treating it with our Pro3® non-amine scavenger to remove H2S. Contact us to discuss how we can help you.

How Would Chinese Tariffs Impact US Shale Oil Exports?

Furthermore, it will be interesting to take notice of how current suppliers in the Middle East, Russia and elsewhere respond to the Chinese market opportunity. Similarly, for Americans and for any country interested in the American market, it will also be relevant to consider the implications of the recently established American embargo on Iran given that it is an oil supplier on one hand, and a potential client on the other. Similarly, for Americans and for any country interested in the American market, it will also be relevant to consider the implications of the recently established American embargo on Iran given that it is an oil supplier on one hand, and a potential client on the other. Read how Mexico plans to import sweet crude oil in November.

Dr. Laura Resendez from Rice and Beans Culture

See you June 5-6 in the Midstream Texas Conference in Midland!

There is a lot going on in our industry and we are excited to attend the Midstream Texas Conference in Midland on June 5-6, 2018. We will have a chance to catch up with old friends and make new ones while listening the most recent news about the oil industry in Texas during these interesting times.

As oil producers continue to face transportation challenges regarding how the oil from the Permian Basin will reach port, its impact in global markets will transform the industry. It is exciting to learn about how the new pipelines are coming together such as the EPIC Crude Oil Pipeline that should connect Orla, TX with Corpus Christi, TX in the second half of 2019. There are voices pointing to the need of additional infrastructure from hotels and sand to pipelines and water, and we look forward to hearing more about what is coming along. Growing takeaway capacity concerns as production and activity continues to rise. It is understandable to face gluts since oil production in Texas grew 17.66% between January 2017 and 2018. Currently, Texas produces 3.89 million barrels per day; 17.73% more than Kuwait. At this level of production and growth, there will be many more challenges and opportunities.

We hope to see you soon! While in Midland, we will continue to spread the word about our Pro3® non-amine H2S scavenger and its advantages. Make sure you get our flyer and contact us to find ways to get more for your barrel. The use of this technically advanced product is helping oil producers in the Permian Basin be more competitive in the global arena. We have treated millions of barrels with excellent result.

The Port of Corpus Christi Expands Infrastructure to Support Oil Exports

Texas ports have grown tremendously and continue to expand its capacity. Particularly, the port of Corpus Christi and the port of Houston have invested heavily to better connect oil producers with markets around the world. See regional port activity driving Texas oil exports. Oil, gas and NGL production in the US have transformed the country in a net exporter. U.S. producers now export between 1.5 million and 2 million barrels of crude a day, which could rise to about 4 million by 2022.

The nation’s output is expected to account for more than 80 percent of global supply growth in the next decade, according to Paris-based International Energy Agency.

This growth accompanies investment in infrastructure throughout the region though challenges remain to eliminate bottle necks in transportation. A new marine terminal facility along the Texas Gulf Coast to export U.S. crude, condensate and refined petroleum products has been approved by the Port of Corpus Christi Commission.

The commission last week approved a lease agreement with Corpus Christi Infrastructure LLC (CCI) for about 55 acres of land on the north side of the Corpus Christi ship channel in the inner harbor for a new oil dock. From 2016 to 2017, the port’s oil exports have increased 267 percent, from an average of 83,488 barrels per day to 306,334 barrels per day. With increasing exports, Q2 Technologies® continues to expand its capabilities—discover our developments

For Q2 Technologies®, there have been many opportunities to help midstream clients treat cargo vessels, oil before being sent in pipelines and in terminals. Contact us, we will be delighted to help remove hydrogen sulfide from oil in different applications and get more for your barrel.