Utica Shale Condensate — What Is This Stuff Anyway?

Shortly after ODNR delivered the Utica shale production numbers for 2012, there were conflicting assessments as to whether it was good news or bad news. See the discussion here. Generally, if one had been looking for high crude oil numbers, perhaps there was disappointment. But as more careful analyses were published, it became clearer that an accurate assessment is not so simple. See, here.[1] While there is a unit of production that would seem to allow “apples to apples” comparisons of the production of crude and gas – barrels of oil per day equivalent, BOE/D – it turns out it is not that simple either. There are NGLs and condensate in the mix, too, and ODNR did not call out those numbers separately. Furthermore, there are different infrastructure requirements and markets for NGLs and condensate. And it gets more complicated than that, say, for example, when the market is foreign. Hydrocarbons, although similar chemically, are distinguished by their provenance. So, for this author, that meant homework. While it will be readily apparent that I am not a petroleum engineer, hopefully this series of articles will enlighten you.

First, some of the terms need to be fleshed out.

Condensate & Condensation

 Condensation is the change of the physical state of matter from gaseous phase into liquid phase, and is the reverse of vaporization.[2]

 Condensate is a liquid – a liquid phase produced by the condensation of a gas. For example, it is the liquid water created (condensed) from the water vapor (a gas) you exhale along with other gases onto cold glass. When the temperature of the vapor is reduced below its saturation temperature – i.e., its dew point corresponding to the pressure in the vapor – a liquid is formed.

Natural Gas Condensate

As in many other cases, “condensate” has a special meaning in the world of oil & gas. “Gas condensate,” or “condensate,” is a hydrocarbon liquid dissolved in saturated natural gas that comes out of solution when the pressure drops below the dew point.[3]

API Gravity

These liquids are described in terms of their API gravities. “API Gravity” is the American Petroleum Institute standard for measuring the relative viscosity or density of oil. The scale is inverted. That is, the lower the API gravity, the more viscous or dense it is. The relationship with water is helpful. If the liquid’s API gravity is greater than 10, it is lighter than and floats on water; if less than 10, it is heavier and sinks. Although an inverted scale/unit inevitably results in confusion (to this writer anyway), it makes sense at least as applied to the value of crude oil – the higher the number, the lighter the crude, and the higher its value.

Oil with API greater than 30º is termed light; between 22º and 30º, medium; below 22º, heavy; and below 10º, extra heavy. Asphalt on average has an API gravity of 8°, Brent Crude 35.5°, and gasoline 50°.[4]

Confusion: Crude oil, NGL or Condensate?

The problem of labeling these hydrocarbons is exacerbated by common usage as condensate is a liquid hydrocarbon that lies halfway between gas and oil. “Over the years condensate has gone by many names: casignhead gas, casinghead gasoline, white gas, and drip gas.”[5]

Hess’ Material Safety Data Sheet for “natural gas condensate sour” lists as synonyms: Drips; Condensate; Field Condensate; Gas Well Condensate; High Pressure Inlet Liquids; Lease Condensate; Natural Gas Liquids (NGL or NGLs); Pipeline Liquids.

In an on-line discussion regarding the nature of crude oil, gasses and associated liquids, an unknown author says,

“If the hydrocarbons in the reservoir were in the liquid phase, we tend to use the label ‘oil’ for both that reservoir liquid and the liquid that remains after ‘dissolved gas’ is liberated when pressure is reduced by production and separation. If the reservoir hydrocarbons were vapor, we tend to use the label ‘condensate’ for liquids condensed when temperature and/or pressure are reduced (especially the latter).”[6] Both oil and condensate are the liquid hydrocarbon phases resulting from “flashing” reservoir hydrocarbon fluids to surface pressure and temperature.

Defining NGL’s, James Speight says, “Natural gas liquids (lease condensate, natural gasoline, NGL) are components of natural gas that are liquid at surface in gas or oil field facilities or a gas processing plant.” Then he goes on to say, “Similarities exist between the composition of natural gas liquids and gas condensate – to the point that the two names are often sometimes erroneously used interchangeably.” Handbook of Industrial Hydrocarbon Processes, James Speight, Elsevier Inc., (2011).

“Lease condensates are similar to natural gasoline, one of the five NGLs.  In fact, natural gasoline is sometimes called a ‘plant’ condensate.” Braziel, infra.

Responding to Gulfport’s reporting of condensate production from one of its wells, Tim Carr, the Marshall Miller Professor of Energy at West Virginia University, finds Gulfport’s different categorization for condensate and NGL somewhat unique. “That is the hydrocarbon liquids in a very saturated natural gas that come out of solution when the pressure drops,” he said of the condensate. “I think when they are distinguishing condensate from NGLs, they are referring to pentane or what is referred to as natural gasoline.”[7]

Speight distinguishes condensate and NGLs this way, “On a strictly comparative basis, the constituents of gas condensate represent the higher boiling constituents of natural gas liquids.” Speight, supra.

Alberta Oil & Gas Trading says, “There is no clear definition of the condensate. Generally crude is considered to be condensate if its API gravity is between 50º API and 120º API.”[8] Rusty Braziel says, “A lease condensate has an API gravity ranging between 45 to 75 degrees.” Braziel, infra. Others say that condensate can have an API gravity of 44-53 degrees.[9] Color is also an indicator.

The EIA Weighs In

The source of the condensate seems to yield a more consistent categorization. The U.S. Energy Information Administration (“EIA”) provides separate estimates of lease condensate and natural gas plant liquids proved reserves. For their purposes, “Lease condensate is a mixture consisting primarily of hydrocarbons heavier than pentanes that is recovered as a liquid from natural gas in lease separation facilities. This category excludes natural gas plant liquids, such as butane and propane, which are recovered at downstream natural gas processing plants or facilities. Lease condensate is often blended directly into other crude oil to enhance quality.[10]

On the other hand, the EIA says, “NGLs are liquid or liquefied hydrocarbons recovered from natural gas in separation facilities or gas processing plants. Natural gas liquids include ethane, propane, butane (normal and iso-), (iso) pentane and pentanes plus (sometimes referred to as natural gasoline or plant condensate).[11] “Pentanes Plus, or C5+, is a mixture of hydrocarbons that is a liquid at ambient temperature and pressure, and consists mostly of pentanes (five carbon chain) and higher carbon number hydrocarbons. Pentanes plus includes, but is not limited to, normal pentane, isopentane, hexanes-plus (natural gasoline), and plant condensate.”[12]

The distinction is important as EIA provides separate estimates of lease condensate and natural gas plant liquids proved reserves. Operators of natural gas fields report their lease condensate reserves and production estimates to EIA on Form EIA-23, “Annual Survey of Domestic Oil and Gas Reserves.” EIA calculates its estimate of natural gas plant liquids reserves using wet natural gas reserves estimates and a recovery factor determined for each area of origin. Data from Form EIA-64A, “Annual Report of the Origin of Natural Gas Liquids Production,” are the basis of EIA’s recovery factors.[13]

Ohio engineer, Marty Shumway, says, simply, “Typically, condensate (volatilized oil) is reported by producers as part of crude oil reserves and production and is distinctly different from NGLs. NGLs are generally derived from off-lease gas processing plants.”[14] That’s the way to distinguish NGLs and condensate, I think, but the market is not that simple.

In the next part of this series, we will look at the sources of and markets for condensate.

[1] Where it is said, “It seems likely that the wet gas area of the Utica will produce large volumes of natural gas liquids and condensate. While these liquids may not be quite as valuable as oil they do provide considerable uplift over and above the price of natural gas.”

[2] IUPAC, Compendium of Chemical Terminology, 2nd ed. (the “Gold Book”) (1997).

[3] http://www.glossary.oilfield.slb.com/en/Terms/g/gas_condensate.aspx

[4] See, http://www.businessdictionary.com/definition/API-gravity.html.

[5] http://digital.library.okstate.edu/encyclopedia/entries/n/na017.html

[6] http://www.helioschariot.com/2013/05/17/education-crude-oil-v-condensate/

[7] “Some Utica Shale Gas Wells May Produce $100,000 Daily,” by Duane Nichols, 1/29/13. http://www.frackcheckwv.net/2013/01/29/some-utica-shale-gas-wells-may-produce-100000-daily/

[8] http://aenergytrading.com/tag/api-gravity/

[9] http://news.alibaba.com/article/detail/energy/100172022-1-factbox-condensate%252C-gas-liquids-pose-oil.html

[10] “U.S. Crude Oil and Natural Gas Proved Reserves, 2011”, U.S. Energy Information Administration, August 2013. http://www.eia.gov/naturalgas/crudeoilreserves/pdf/uscrudeoil.pdfexport

[11] http://www.iea.org/interenerstat_v2/definitions/results.asp?id=15&Type=Products

[12] http://www.epa.gov/climate/ghgreporting/help/tool/definitions/pentanes.html

[13] “U.S. Crude Oil and Natural Gas Proved Reserves, 2011, U.S. Energy Information Administration, August 2013. http://www.eia.gov/naturalgas/crudeoilreserves/pdf/uscrudeoil.pdfexport

[14] Notes provided by Marty Shumway, MacKenzie Land & Exploration, Ltd., Worthington, Ohio

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