Chemical Engineering May 2013 - 18

www.woodmac.com
Cover Story
Wood Mackenzie
Total US Liquids Supply Forecast Q4 2012
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Bakken
Conventional L48
Tight Oil Gulf of Mexico Alaska NGLs
Eagle Ford
Niobrara
Bone Springs/Wolfcamp
Other established tight plays Emerging/new tight plays
FIGURE 2. The largest fraction of the tight oil increase in the coming years will be from the Bakken and Eagle Ford formations
Basin in Texas, which contains the
Eagle Ford formation. According to
the U.S. Energy Information Administration
(EIA; Washington, D.C.; www.
eia.gov), annual production of crude
oil from the Bakken formation already
more than doubled between 2010 and
2012. Other areas that are attracting
significant investment for tight
oil production include Niobrara shale
in Colorado and Wyoming, the Utica
shale, especially in parts of Ohio, the
Permian Basin in West Texas and the
Monterrey shale in California.
The new technologies for extracting
oil and gas from shale have radically
changed the oil-and-gas supply picture
in the U.S., says Daniel Lippe, founder
of Petral Consulting Co. (Houston;
www.petral.com). U.S. petroleum refiners
stand to benefit, because of the
steady supplies that will be available
to them via pipelines, rather than relying
on imports shipped by sea.
Despite the opportunities, however,
tight-oil crudes present unique technological
challenges to petroleum refiners.
Unlike most crudes, tight-oil
crudes tend to be light, sweet crudes
with high paraffin content and low
acidity, according to a presentation
from Bruce Wright, a senior technical
engineer from Baker Hughes Inc.
(Houston; www.bakerhughes.com).
The significant molecular weight
distribution of paraffin in tight oil is
a major potential problem for downstream
processing, he says, because
of the potential for fouling due to wax
deposition. Tight-oil crudes also generally
have a minimal asphaltine phase,
and varying amounts of filterable solids,
hydrogen sulfide and mercaptans.
Aside from paraffin wax deposits, tight
oils can also create difficulties with
corrosion, bacteria growth and destabilized
asphaltenes, Wright points out.
Pipeline infrastructure
Aside from technology concerns, taking
full advantage of tight oil requires
corresponding transportation-logistics
infrastructure, several speakers at the
AFPM meeting indicated. Currently,
existing pipeline infrastructure for
transporting petroleum is not sufficient
to handle the surging volumes
of crude oil from shale deposits in the
U.S., particularly from Bakken and
Eagle Ford. This situation is placing
the shale oil at a discount compared to
other benchmark crudes.
" Because of the dramatic growth in
tight-oil production from Bakken and
Eagle Ford shale plays, there have been
pipeline pinchpoints that push people
toward non-traditional modes of transport
for crude, " such as rail and barge,
says Wood Mackenzie's Wojciechowski.
" The market needs more 'relief
valves' to ease bottlenecks at pipeline
hubs, " Wojciechowski comments. The
question is becoming, " how much domestic
tight-oil crude can be absorbed
18 CHEMICAL ENGINEERING WWW.CHE.COM MAY 2013
[by refineries] before starting to erode
its value. "
A wave of pipeline investment has
ensued to address the logistics challenges.
A host of new pipelines have
either been recently completed or are
under development, including several
projects to transport crude oils to and
from the major petroleum supply hub
of Cushing, Okla. For example, phase
2 of the TransCanada Keystone pipeline,
completed in 2011, delivers crude
oil from Hardisty, Canada and the
Williston Basin to Cushing, while the
Enbridge/Enterprise Seaway expansion
was completed earlier this year
to expand an existing pipeline that
brings crude oil from the Cushing hub
to the U.S. Gulf Coast. Other pipelines
to further increase take-away capacity
from Cushing are planned to begin
service in late 2013 (TransCanada
Gulf Coast Project) and early 2014
(Seaway Twin), according to the EIA.
Declining gasoline demand
The market for petroleum-derived
products is also shifting. A number
of factors, including increased CAFE
(corporate average fuel economy) standards
for automobiles in the U.S., mandates
for including ethanol in gasoline
as well as other factors have combined
to create the conditions for a projected
decline in gasoline demand in the U.S.
Some estimates, including those from
the EIA, project a decline in gasoline
1,000
2,000
3,000
4,000
5,000
US Tight Oil Forecast Q4 2012
Thousands of bbl/d
Thousands of bbl/d
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

http://www.woodmac.com http://www.eia.gov http://www.petral.com http://www.bakerhughes.com http://WWW.CHE.COM

Chemical Engineering May 2013

Table of Contents for the Digital Edition of Chemical Engineering May 2013