Asian buyers hijack infected American shale oil

(Bloomberg) – The United States' complex network of US pipelines, reservoirs and export terminals, which has helped America become the world's largest oil producer, is causing some crude oil buyers headaches.

Different types of crude oil flow through the supply chain from shale fields from Texas to North Dakota, so they risk recovering impurities before reaching Asia, the world's largest oil-consuming region. . Specifically, refiners worry about the presence of problem metals, as well as a class of chemical compounds called oxygenates, which can affect the quality and type of fuel they produce.

Two refiners in South Korea – the largest purchaser of US offshore supplies – have rejected shipments in recent months due to contamination that makes treatment difficult. The growing production in North America of dozens of fields ranges from highly volatile oil to sticky residue through shared tributaries and mains. Small carriers then transport cargo from shallow water ports to super-urban giants in the Gulf of Mexico for delivery to distant buyers.

Throughout its transit from pipes to tanks and ships, foreign compounds from other fuels or chemicals for tank cleaning or stabilizing materials can seep into the reserve and foul the refining equipment. Although crude also crosses a similar chain in the Middle East, the risk of impurities is lower, as each variety of oil usually has its own infrastructure.

In the case of US condensates, a type of ultra-light oil pumped into shale fields, cargoes can generate pollutants such as "oxygenates, metals, and cleaning agents," said Sebastien Bariller, vice-president of the United States. senior president of South Korean company Hanwha Total Petrochemical Co. causing uncertainty about the quality of US oil, contrary to purchases in the Middle East, where quality is stable, he said.

The two South Korean refiners – SK Innovation Co. and Hyundai Oilbank Co. – have refused supplies of Eagle Ford crude to arrive in January and February due to quality issues, according to people familiar with the case, who asked not to be identified because the information is private.

Cargoes were sold by oil giant BP Plc. At least one of the unwanted cargoes was diverted to the Chinese port of Qingdao in a smaller vessel and purchased by Sinochem Hongrun Petrochemical Co., an independent refiner with different quality requirements and plant configurations.

The spokespersons of SK Innovation and Hyundai declined to comment. BP does not comment on daily procurement and trading, he says in an email. The company adheres to its contractual commitments and "if problems arise, BP will work diligently to solve the legitimate problems," adds the site.

Although all oil shipments from the massive Eagle Ford deposit in south Texas are not contaminated, SK, Hanwha, Hyundai and their national rival GS Caltex Corp. stated that they would closely monitor quality issues, including the presence of oxygenates prior to delivery. Shipments of crude oil pumped into the Gulf of Mexico – which pass through a much more direct supply chain – have consistent characteristics, they said.

Oil transit

According to Dennis Sutton, Executive Director of the Crude Oil Quality Association, an American industrial group, oxygenates are not naturally present in crude oil. They should probably be introduced in the processing of oil from the wellhead to the refinery.

In the United States, the infrastructure needed to link production fields to deepwater ports is lagging behind the rise in exports, with limited sales by sea until the end of the year. 2015. Refiners along the Gulf Coast – where most US oil was refined before export approval – are used to solving quality problems because their facilities are more sophisticated.

US crude exports rose from less than 100,000 barrels per day at the end of 2012 to 2.5 million barrels in December. South Korea has been the biggest consumer of American oil this month, with more than 550,000 barrels a day.

Despite the problem of contamination, Hanwha Total's Bariller said South Korea could not afford to turn away entirely from the United States, as the country remains a major supplier of extra oil, especially during this period. Uncertainty surrounding shipments from Middle Eastern countries such as Iran.

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