Why Eagle Ford producers will benefit first from US oil export



What is condensate?

Condensate is made up of short hydrocarbon molecules that weigh much less than the long hydrocarbon molecules in regular crude oil. As a result, condensate is considered to be a very light kind of oil. The mixture of hydrocarbons in condensate range from highly volatile natural gas liquids (or NGLs) to naphtha range materials resembling gasoline. This makes condensate very versatile. NGLs commonly produced with condensate include ethane, propane, and butane. Condensate earned its name because it’s a vapor in its underground reservoir that condenses as it rises to the surface, where the temperature is lower.

Condensate Extraction

Eagle Ford and condensate production

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Condensate is produced along with oil and gas. The Eagle Ford Shale in Texas is considered to be one of the major producers of condensate. According to the Energy Information Administration (or EIA), as much as half of oil production from the Eagle Ford falls under the condensate category. In the following graph, we can see the condensate rich areas of the Eagle Ford in terms of the American Petroleum Institute gravity (or API). API gravity is a measure of how heavy or light a petroleum liquid is compared to water. Usually, condensate has an API gravity of 50 degrees and higher.

Eagle Ford’s Condensate Rich Areas

The graph shows that the condensate rich areas of the Eagle Ford lie toward the western and southern parts. Companies that will benefit from these positions include Pioneer Resources (PXD), Marathon (MRO), Murphy Oil (MUR), and Devon Energy (DVN) who are the biggest condensate producers in the U.S. Most of the companies are a part of the Energy Select Sector SPDR (XLE).

Continue reading the next sections in this series to learn how these producers could benefit from the export ban being loosened.


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