Meeting Archives

Houston, TX, 28 October 2010

The Association gratefully acknowledges the following:

Inspectorate hosted a reception for everyone and dinner for the COQA Board on the 27th; 
Core Lab hosted a continental breakfast for everyone on the 28^th;
Platts hosted lunch for all meeting attendees on the 28th; and  Intertek hosted a reception for everyone on the 28th.

Their generosity is greatly appreciated.

Domestic Trading Center Subcommittee (DTC) Report

“Domestic Sweet / WTI Specifications”, Dennis Sutton, Marathon Petroleum.  Dennis provided a review of the Subcommittee’s history. Following this, he discussed the letter with the recommended additional specifications sent by the COQA Director on 10 August 2010 – a copy of which is posted on the COQA Website – to numerous companies having an interest in domestic sweet crude oil at Cushing, OK, and the responses received. An ad hoc committee will be impaneled to develop procedures for adoption and implementation of the additional specifications and for a monitoring and testing program.

In closing, it was discussed whether COQA or individual shippers should pursue this further with operators and Nymex. The consensus was that, to avoid any perception of anti-trust, it would be advisable for the shippers to individually assume responsibility.

Canadian Crude Quality Subcommittee Report

“Crudemonitor.ca: A Work in Progress.” Rena Liviniuk, Crude Quality Inc. Crudemonitor.ca was established and is maintained in the interest of communicating data and information pertaining to Western Canadian Sedimentary Basin crude oils. The crude oils included are based on availability to market, and a testing schedule is designed to provide relevant information by grade. Rena reviewed the changes that have been made to improve ease of use, and to better represent the available data for each grade. Interactive custom reporting allows users to focus on the information they specifically need. Mobile access provides on-the-go availability to both current and historical data. In her report, Rena included screen shots of a number of the pages illustrating the enhancements made to the Website.

“Introduction to TransCanada Keystone Pipeline”, Aaron Ha, TransCanada. In opening his presentation, Mr. Ha provided a brief overview of TransCanada’s organization and assets. It is North America’s largest natural gas system with over 40,000 miles of wholly- or partially-owned pipeline having an average throughput volume of 14 Bcf/d. The Keystone crude oil system has a current capacity of 1.1 million barrels/day. Phase I of the system which entered service in 2Q2010 extends from Hardisty, AB to Patoka, IL. Extension of the operation to Cushing, OK is expected to begin operations in 1Q2011, with operations to the Gulf Coast expected by 1Q2013.

In managing quality of the crude oil transported through the system, Keystone minimizes start/stop operations, maximizes batch sizes, arranges “quality trains” when possible, and operates the pipeline in turbulent flow to the extent it can. Deliveries on the system are completed on a midpoint volume cut basis, with equal volume of “contamination” allocated between batches. To date, interface and crude quality have been in line with modeled calculations.



“Update on CCQTA activities”, Dennis Sutton, Marathon Petroleum, representing CCQTA. Dennis provided background on the CCQTA, the Scope and Current Activity of the seven active projects within the association, and discussed two project proposals that are under consideration.  The currently active projects are: 

• Condensate Quality
• Oilsands Bitumen Processability
• Phosphorus in Crude Oil
• TAN Phase IV
• H₂S in Crude
• Heavy Oil Compatibility
• Fluorocarbons in Crude

The two project proposals that are under consideration are: 

• On-line Contaminant Monitoring
• Crude Quality Tutorial

The on-line contaminant monitoring project proposes to employ existing instrumentation to undertake at-line/on-line monitoring of crude oil contaminants. Preliminary results with MWD XRF seem promising, although LIBS technology is also being assessed.  The crude quality tutorial project proposes to develop presentation material ranging in length from ½ hours to 1 day. These are intended to cover all facets of crude oil quality including production, pipeline transport, refinery operations, waste handling, and laboratory testing among other topics.

General Meeting

“New and Emerging Price Benchmarks in the Americas”, Dan Massey, President, Argus Media. The Argus Sour Crude Index (ASCI) is the volume-weighted average of all trades for Mars, Poseidon, and Southern Green Canyon crude oils. For calculating the index, the total trade in these three components must reach 6,000 b/d. Launched in 2009, the index is used by Saudi Aramco, Iraq (SOMO), and Kuwait (KPC). Nymex and ICE have launched various swaps and futures for trading and clearing based on ASCI. Using recent actual data, Mr. Massey illustrated how the index is calculated. He then discussed how ASCI reflects the value of the domestic crudes that non-U.S. crudes are competing against in the delivered market – especially the U.S. Gulf Coast.  In addition to ASCI, Argus also publishes total market volume-weighted price indexes for SYN and WCS. In closing his presentation, Mr. Massey noted 

• The U.S. Gulf Coast is emerging as a pricing center
• The quality of crude oil remains vitally important
• Trusted benchmark prices produce more spot market liquidity
• All of which leads to more stable revenue, and feeds back into investment growth in upstream development
  
  

“Crude Oils & Refining – Outlook and Impacts of Regulations”, Martin Tallett, EnSys Energy.  The current recession has had a significant impact on demand and refining. Pending legislation in a number of countries related to areas such as marine fuels and climate, and tightening of fuel quality specifications could further exacerbate these impacts. Energy and policy initiatives in Europe, Japan, China, the U.S., and Canada must be carefully monitored for their implications on refining and opportunity crudes.  Climate legislation, in particular, is likely to rearrange oil markets. 

“Enterprise North American Crude Oil Assets”, James F. (Jim) Healey, Enterprise Products Partners.  Enterprise’s onshore crude oil assets include over 3,300 miles of pipeline and 3 million bbls of storage in several systems in Texas, New Mexico, and Oklahoma. They also have storage at Cushing, OK. In partnership with ConocoPhillips, Enterprise operates the Seaway Pipeline System extending from Freeport, TX to Cushing. This was described in detail with illustrations of the supporting facilities. Enterprise’s offshore Gulf of Mexico assets include a significant pipeline network that deliveries crude oil and natural gas to terminals onshore in Texas and Louisiana. 

”Gavilon Overview”, Tom Ramsey, Chief Operating Officer, Gavilon Energy. The Gavilon Group was formed in 2008, at which time it acquired the ConAgra Trade Group from ConAgra Foods.  Its business mix is comprised of agriculture (52%), energy (32%), and fertilizer (16%) segments. Its agriculture segment is the 5^th largest grain merchandizing operation in the U.S., and their fertilizer segment is the 2^nd largest distribution network in the U.S. Their energy segment is multifaceted and includes crude oil, refined products, natural gas, natural gas liquids, and renewable fuels with facilities in a number of states.  

Since its formation, Gavilon has implemented a number of growth initiatives in all three segments in both the U.S. and abroad. At Cushing, OK, for example, they are constructing 4.1 million bbls. of crude oil storage capacity, with completion anticipated in September 2011.

“Unconventional Crude Processing Part 2: Heteroatoms”, Scott Sayles, KBC.  Unconventional crudes have several competitive advantages over conventional crudes including a favorable margin with ability to produce equivalent clean products. But, they have a number of disadvantages including higher metals, TAN, and heteroatoms (S, N, O). These latter impact catalyst replacement cost, chemical consumption, entail greater waste disposal, and require additional energy usage among other factors. Understanding the heteroatom composition, distribution, and behavior in unconventional crudes in important in planning their efficient processing. Scott discussed these factors and provided several case studies to illustrate their impact on refining processes. A number of tools are available to assist the operations/refinery engineer in planning efficient processing of unconventional crudes.

“Trace Tag’s DNA Oil Marker”, Dag Haugse, Trace Tag International Ltd.  Each DNA code is unique and the number of permutations available increases at 4ⁿ power with the number of bases in each string (ⁿ). Only minute volumes of tag are necessary in marking a crude oil or refined product. Tagged samples can be analyzed in either the field or laboratory, and multiple codes can be detected during the process and quantified. DNA tagging provides Governments the ability to monitor subsidized and taxed fuel, oil companies a tool for brand protection and franchise compliance, and crude oil purchasers the ability to distinguish legitimate from “blood oil.” Besides the petroleum industry, DNA tagging has found applications in numerous other industries including pharmaceuticals, textiles, packaging, and security among others.

“Crude Unit Overhead Automated Corrosion Control”, Sam Lordo, Nalco. Processing of opportunity crudes with high TAN requires careful attention to control overhead corrosion. Sam used several case studies to illustrate how excursions can go undetected resulting in considerable corrosion in a short period of time. Use of a continuous online analyzer and chemical control can have considerable anticipated value providing: 

• Improved reliability
• Reduced total cost
• Improved corrosion performance
• Real time caustic/chloride control
• Improved control and safer operation
• 24/7/365 reporting through a real time Dashboard 

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This concluded the October 28, 2010 meeting of the COQA.  The next meeting of the association will be in early Spring, 2011, in San Antonio, TX.