“The flow of U.S. oil to Asia is here to stay, but Asian importers are learning that not all grades are equally desirable,” says Tushar Tarun Bansal, a consultant from McKinsey Energy Insights. “Buyers are wary of grades such as Eagle Ford and can’t take much more of it.”
Three Asian refiners that purchased and refined Eagle Ford shale oil don’t plan to buy significant volumes of the grade due to concerns over the consistency of its quality, according to a Bloomberg survey of officials at the companies. Two of the three respondents said their cargoes -- each between 500,000 and 1 million barrels in size -- yielded more light distillates such as liquid petroleum gas and naphtha than they expected.
According to the refiners and two sellers of U.S. crude to Asia, the variance in characteristics is acute for grades such as Eagle Ford and Domestic Sweet Crude -- an aggregate of oil from numerous streams that’s blended in tanks such as those in the storage hub of Cushing, Oklahoma.
“Unlike Middle Eastern or West African crudes, which originate from one single large and stable reservoir, shale crudes are often extracted from multiple layers and can originate from different parts of a basin which have varying geological characteristics,” said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd.
Eagle Ford consists of a blend of oil and ultralight crude called condensate that’s pumped from thousands of wells in a formation that sprawls from Texas to Mexico. Its American Petroleum Institute gravity -- a measure of density -- ranges from 45 degrees to over 60 degrees. Domestic Sweet Crude, or DSW, is a composite of crude from conventional and unconventional acreage in the U.S. and Canada with an API gravity reading of 37 to 42 degrees.