After pushing to solve problems with blending crude grades at the US pipeline hub of Cushing, Oklahoma, an industry group has identified a potential similar issue of inconsistent specifications at US Gulf coast export terminals.
The Crude Oil Quality Association (COQA), which met in Galveston, Texas, this week, is known for its years-long efforts to lobby the CME Group, which operates the Nymex exchange, to adopt new specifications for West Texas Intermediate (WTI), the US crude futures benchmark delivered at Cushing.
While WTI originally was largely piped from west Texas oilfields, Cushing increasingly became the destination for other crude streams including heavy Canadian grades, raising concern that differing qualities of crude were being blended into WTI to the detriment of refiners.
"The situation in Cushing has largely been dealt with in terms of quality," said Pat Swafford, commercial director at Haverly Systems and a member of COQA's board of directors. The quality of domestic light sweet (DSW) blended at Cushing is still not completely consistent "but it is way better than it was," he said. "Refiners can see much more consistency in terms of the quality of that stream than was possible back in the mid-2000s."
Now crude quality standards at the Gulf coast terminals that predominantly export Midland-grade WTI could be a focal point for COQA's efforts in the future, Swafford said.
"As you look across the various terminals, each terminal has their own specifications," Swafford said. "They are not all the same, but they all sell 'WTI'." Specifications at docks operated by midstream companies like Enterprise Products Partners are similar, but they "are largely similar to the original Nymex specifications" and focus mostly on API gravity and sulfur, he said.
Overseas refiners, meanwhile, have raised concerns about metals and acid content in US crude streams, which damage their refining kit. Past COQA meeting attendees have referred to crude from the docks in Corpus Christi, Texas, as "the Gucci grade of WTI," which illustrates the variable quality of US exports, Swafford said.
Though COQA is not actively working on WTI export standards at the moment, "the industry as a whole needs to work together with this organization on the WTI export market" to maintain consistent quality at WTI export terminals, Swafford said. "That is my challenge to the industry on this."
