The concept of condensate has been around awhile, but it traditionally hasn’t been considered something distinctly separate from crude oil. In fact, it has typically been fed into the crude mix when produced. However, new methods of onshore natural gas and oil production have led to an explosive increase in the stuff. This can be seen in several ways in the U.S. One could look at the number of natural gas and natural gas condensate wells reported to the Energy Information Administration (EIA) since 1989, going from 262,000 then to 487,000 in 2013. A look at statewide condensate production also proves useful. Texas, for example, went from 32.5 million barrels of condensate in 1993 to nearly 70 million in 2012 (PDF).
As condensate production has grown, producers and regulators have gradually been forced to more closely consider how to separate it and when it can be exported. Another important consideration has also arisen: how exactly do you define condensate?
Nearly 12 percent of U.S. crude may today qualify as condensate. A loose definition for condensate is “a light liquid hydrocarbon that is extracted with oil and natural gas.” As Reuters reporter John Kemp pointed out in October 2014, definitions of condensate have diverged based on who is handling it. Producers tend to look at the chemical properties and uses of the hydrocarbons, while regulators are primarily concerned with how the hydrocarbons are produced. For example, the EIA lumps lease condensate with crude oil but separates the two for reporting when it comes from natural gas processing plants and refineries. Kemp argues “new and more consistent definitions are needed that harmonize the classification of natural gas liquids and other condensates” regardless of where they come from.
Need for this harmonization of definitions became more important in 2014 with Bureau of Industry and Security (BIS) decisions and clarifications that have opened the door to condensate exports. With supplies of condensate increasing in the U.S., many companies are taking a renewed look at condensates and what can be exported. However, until the EIA finalizes defining condensate — likely by a scaled API gravity rating — and Federal Regulations get updated, accurate numbers on condensate export will remain elusive.