Condensate considerations

June 1, 2015
Bills to expand federal offshore oil and gas leasing and revenue sharing with coastal states may have generated more questions.

Bills to expand federal offshore oil and gas leasing and revenue sharing with coastal states may have generated more questions. But US Bureau of Ocean Energy Management Director Abigail Ross Hopper also discussed a measure dealing with petroleum condensate at the US Senate Energy and Natural Resources Committee's May 19 hearing on energy supplies.

S. 1224 aims to standardize the federal government's definition of, and policies related to condensate, "which is a very light form of petroleum," the committee's majority staff memorandum on the bill said.

"Many federal agencies have different definitions of what qualifies as 'condensate' and how it differs from 'crude oil,'" it noted. "In common parlance, one man's 'heavy condensate' is another man's 'light crude.'"

The majority staff memo did not mention that these varying definitions didn't matter much until the US Department of Commerce's Bureau of Industry and Security's June 24, 2014, ruling that upgraded condensate could be exported as a petroleum product.

S. 1224 would affirm that decision. It also would direct the US Department of Energy to create a standard definition for condensate, and authorize DOE and the US Department of the Interior to assess it separately from crude oil.

Hopper explained what this could involve in her written testimony. BOEM currently defines condensate as a very high-gravity liquid, one greater than 50° API. It reports crude and condensate jointly as oil in its Assessment of Undiscovered Technically Recoverable Oil and Gas Resources on the US Outer Continental Shelf.

Resource assessments conducted by BOEM geoscientists and engineers in frontier areas lack the empirical data to define the condensate yield separately, Hopper said. Assessors rely on overall oil and gas volumes associated with analogue fields from publicly available industry sources and third-party data services which also don't report condensate separately, she indicated.

A working definition

BOEM is willing to work with other federal agencies to develop a working definition of condensate to help clarify US energy policy, but opposes adopting a separate reporting convention for condensate in its undiscovered OCS oil and gas resource estimates, Hopper said.

"The bill would increase uncertainty in US Geological Survey undiscovered petroleum resource assessments, especially estimates of natural gas liquids," she said. "Industry, state, and national databases upon which USGS relies to estimate natural gas liquids do not include condensate as a separate item."

If it was required to report condensates as part of its undiscovered resource assessments, USGS would have to use very uncertain condensate estimates alongside more reliable NGL figures that already exist, Hopper said. If a new condensate definition was developed, USGS says inclusion of new figures into assessments would take years, she added.