Treating Trucked Sour Crude

Unique Treatment Solutions

Unique Treatment Solutions

Barrels that have moderate to high levels of H2S are typically challenged economically from the start. First, from a safety standpoint – more oversight, training, CAPEX & OPEX, and effort goes into protecting the people and assets involved. Next, the untreated barrel will likely get rejected commercially and will not move via pipeline, which leaves trucking that sour barrel to market as the only alternative. Unfortunately, as a double whammy, that trucked sour barrel typically goes to a market that stacks yet another financial hardship on its value: a dreaded sour oil deduct on the netback price. The value erosion on that barrel can be a significant drain on the Producer, and in some plays the whittling away on the sour barrel can be borderline uneconomic. Ugh!



With higher overall WTI per barrel in Q4 2021, more production is likely on the way to realize the price bump. In fact, production in the Permian is heading back to pre-pandemic levels increasing output to an average of 4.826mmbls/d in October, according to a recent ClusterX article citing a U.S. government report. Which is just shy of the record set in March 2020 at 4.913mmbbls/d right before COVID-19 fundamentally disrupted global demand and sent supply reeling. Although the industry has done a good job in the previous years building out the gathering and long-haul pipeline systems, trucking fills in the gaps. Although difficult to pin down an exact number, trucking in the Permian has always filled the takeaway gap and according to several historical reports, several thousand truck haulers operator daily – which means potentially a quarter million+ barrels are being hauled in the Permian at any given time. And in this case for sour barrels, Producers and Midstreamers rely heavily on this critical delivery component. It can be challenging to commit capital to build pipelines to inherently less valued barrels due to the presence of their sulfur content, and so, many sour barrels are stranded in the field to be delivered only by truck.

Fortunately, there are treatment solutions available, and economic ones a that! Q2 Technologies recently implemented a system for a leading Midstream company to accept H2S barrels to treat automatically at an existing multi truck lane LACT station. This novel approach makes economic sense to all parties involved; here’s how it works:

Once the oil hauler, who is transporting a sour barrel, begins pumping volume at the facility, the lease automatic custody transfer (LACT) sends a signal to the Q2 pumps to being dosing. The crude oil is then treated as it is transferred in the tanks. Once treated, the barrel meets H2S specifications and can be sold into a sweet market. This setup is capable of treating all lanes simultaneously several thousand barrels per day at H2S levels in tens of thousands of ppm. 

Net benefit to all:

Producers are able to produce their sour barrel and deliver it to a facility that is tied into one of the premier markets in the Permian, in order to fetch the highest netback prices available. Oil haulers are staying busy moving product to market. The Midstream company did not have to reject that sour barrel, thus increasing throughput and generating additional revenue. A win-win-win!

The comingled lines are routed to a single point where treatment occurs. Oil Haulers transport approximately 190bbls per load, and this facility receives several dozen loads per day of H2S ladened crude oil.

As the crude oil flows towards the tank battery, Q2’s Pro3 product is injected, thus ensuring that treated volume enters the tank battery array. This configuration allows for all truck lanes to offload and be treated simultaneously without pressure or flow upsets.


Q2 Technologies company data, 2001-2021.

From the Texas Freeze to Hurricane Season

The Triazine Market Explainer

The Insight You Need to Know

Deep Freeze February 2021:

Texas and much of Louisiana experienced an unprecedented extended freeze that shocked nearly every facet of modern living in the region from busted water lines and electrical outages to major industrial systems going offline.

Texas Freeze, February 14th. 2021
Historical Texas Freeze, February 2021

The chemical industry that supports the Oil & Gas industry, especially for Producers that use triazine or other amine-base chemistries to treat hydrocarbons, also felt the effects of this storm. Triazine based chemistries have been traditionally used to scavenge hydrogen sulfide (H2S) from natural gas and certain liquid hydrocarbon streams. The storm and summer have passed, but the long-term ramifications are still playing out, and for some the supply crunch is very much ongoing. Relief is on the horizon but not fast enough for some. Here’s a bit of history as to why we are seeing this near-commodity market acting the way it is and some forecasts for the supply/demand in 2022.

Winter Storm of February 2021

In mid-February 2021, Texas suffered major power outages throughout the state spurred on by a series of winter and ice storms from Feb. 13-17. The storms caused a massive electricity generation failure across Texas which led to shortages of food, water, and heat – all told more than 4.5 million homes and businesses were left without power for days and over $20 billion in damages have been reported.

Winter weather alerts in Texas on February 14th. 2021
February 14th, 2021: Every county in Texas and much of Lousiana were under a Winter Storm Warning.

The Components of Triazine

The formaldehyde-MEA triazine, which is a common H2S scavenger in natural gas, is synthesized by the reaction of formaldehyde and monoethanolamine (MEA). Triazine, water, and free formaldehyde or free MEA are the components of triazine and each play a critical role in the effectiveness of triazine as a stable product. It is a near commodity because of the overall general availability and mass manufacturing in the Gulf.

Why the Supply Upset in late 2021?

The chemical plants that are devoted to making the raw material for triazine, namely formaldehyde and MEA for the U.S., are located predominately along the Gulf Coast and most were severely impacted by the 2021 Winter Storm. When those plants went down for maintenance under force majeure in late February, some experienced extended delays taking months to get back online. This maintenance period was by far longer than most expected. During this downtime, Producers and other end users partly relied on existing inventory of triazine and began to see tighter allocation of both raw materials. As Q1 and Q2 progressed, MEA prices continued to steadily climb due to tight supply and higher demand in oil & gas as WTI continued to climb. H2S scavenging or H2S removal is needed for safety standards but also due to flaring restrictions in natural gas. It is necessary for Producers to remove H2S before flaring to limit SO2 emissions. If a Producer reaches its flaring limit, the highly valued crude oil value cannot be extracted, and the well must be shut in. Both Texas and New Mexico, where most of U.S. production is found have strict flaring limits.
As plants came back online in the late spring/early summer, the supply of MEA was still tight as manufacturers had drained coastal storage tank inventories. The storage tanks had run so low, there was concern that the tanks needed to be refilled to a certain level to ensure that when Hurricane Season was upon the Gulf Coast, there would be enough volume to physically weigh down the tanks incase high winds took direct aim.
Therefore, even though MEA was being made, the throttle was not fully opened to triazine manufacturers and a supply squeeze, albeit slightly lessened from earlier in the year, was still driving prices higher as demand increased in parallel. As WTI and Brent continue to climb, natural gas has also seen as surge in pricing. Natural gas prices that had been hovering around $2.50/MMBtu has spiked to $5.95/MMBtu on 9/28/21. Associated gas from crude oil production typically seen with little no value now warrants higher H2S treatment costs which drive triazine demand higher.
Near-term Henry Hub gas prices still support elevated levels of $/MMBtu which provides a bit of netback cushion to absorb the cost of treating with triazine. However, as triazine prices will fall when supply is rebalanced, the cost to treat the gas could improve the Producers’ netback price for gas.

Natural Gas Prices, Futures and Forecast
Henry Hub natural gas price and NYMEX confidence intervals dollars per million Btu
Current Triazine Market
Triazine Supply and Demand for Fall 2021

Outlook for Triazine

Hurricane Ida played an important role in the current amine shortage. The two largest producers lost about two weeks of production and declared force majeure limiting their supply to about 50% of normal output. A Mexican manufacturer is also down for maintenance leaving only one supplier running at capacity. Ethanolamine manufacturers are seeing 2-3x demand higher than production and see the shortage lasting well into 2022.
With the uncertainty of the supply of triazine in the market, as a manufacturer and supplier of triazine, we understand the market’s frustration! However, if your production has been severely impacted by triazine and if you are using that to treat crude oil or liquids, our Pro Series (Pro3® and ProM®) line of non-triazine/non-amine scavengers could be a cost and operational savings an alternative. Contact us at or 832-328-2200 to learn more about how we are treating millions of barrels each month with these products.

Q2 Technologies company data, 2001-2021,

What is the Outlook for US Shale?

US shale outlook is cautiously optimistic for 2021

Reflections on global oil demand/supply for 2021

While 2020 brought a huge shock to the entire world, the oil industry was hit particularly hard. US shale requires continued investment to respond to the future global oil needs. However, as we look back on the past year and move forward with the new year, there are three important factors to consider as we reflect on the outlook for US shale. We expect a general improvement for oil, and for US shale in particular while capital discipline will make it hard to find resources for investment.

Demand Side

Demand destruction during the past year was less than most expected.

Global oil demand only decreased in the mid-teens during the COVID 19 crisis though it was thought that demand would decrease in the high 20’s. Even with reduced economic activity and widespread lock-downs during the current pandemic, global oil demand did not fall as much as it was feared. A part of this is due to the people’s avoidance of public transportation to avoid exposure. This is a particularly interesting phenomenon because it seems to point to a permanent behavioral change resulting from the pandemic. The importance of preserving energy independence if also a key geopolitical point for the US moving forward.

Global oil demand recovery has been very robust.

The lowest global oil demand in April 2020 was close to 80MMbpd and it is currently back at over 100+ MMbpd. This is a very significant increase since mid-April 2020. The demand outlook for 2021 is really strong considering a successful global vaccine rollout.  That will bring along strong economic recovery and a comeback of traveling and jet fuel demand.

Supply Side

Global Oil inventories are getting lower and lower.

Global oil and liquids inventories signal the direction of prices. Currently, they are falling and are expected to continue to do so. The initial shut-ins and production curtailments resulting from pandemic reduced global oil supply. While we foresee increased demand, the natural decline in productivity rate will drive supply declines in late 2020 and through 2021. Oil supply coming from OPEC+ is expected to hold flat through 2021 at 3 MMbpd if price remains at $45/bbl.

At strip pricing, the global oil inventory drawdowns will accelerate sharply in the coming months leading to unrealistic inventories. If price remains at $45, crude oil inventories expressed as OECD days of consumption would reach only 22, which signals that prices could not be that low. Inventories are normalized around 30.

Production and price levels are likely to rise.

It is expected to see prices gradually rising during the first half of 2021 while they will rise sharply during the second half considering the inventories falling way beyond normal. OPEC will likely increase production to max capacity by the end of 2021. Additionally, it is expected that Iran will also be able to participate on the market with an additional supply of around 1Mbpd.

US Shale Outlook

The outlook for US shale is cautiously optimistic with expected improvement on the second half of 2021. Current damage to US industry will result in substantially low supply during the current year. US supply response will lag rig count changes. For the US to increase production, it is expected that oilfield activity will ramp sharply higher towards the end of 2021 and into 2022 when oil prices reach higher levels.

If existing laws and regulations remain through 2050, projects domestic crude oil production to return to 2019 levels by 2023 and then remain near 13 million to 14 million barrels per day (b/d) through 2050. The United States continues to be an integral part of global oil markets and a significant source of supply, despite uncertainty surrounding post-pandemic expectations for oil and natural gas demand.

US will be one of the key crude suppliers into 2050
The US, a key crude supplier into 2050

High H2S and mercaptans levels are expected to continue appearing in the many Permian Basin wells, hence timely monitoring and treatment are paramount even during these next few months when prices are expected to remain around $45. As production levels rise, so will the need for treatment. As always, we at Q2 Technologies are here to serve you with all your treatment needs.