HOUSTON – The U.S. Gulf Coast may need six to eight facilities to process condensate - a very light form of crude oil - and export it to handle a glut of output from the Eagle Ford field in Texas, Magellan Midstream Partners LP Chief Executive Michael Mears said.
Splitters, or a very basic distillation tower, give condensate a minimal level of processing that allows it to be exported like a refined product. Without that processing, condensate is considered crude oil under U.S. law and therefore cannot be exported.
"Our analysis suggests there is a very healthy appetite for condensate splitters on the Gulf Coast," he said.
The CEO of Magellan, a pipeline company that owns the longest refined petroleum products system in the United States, said companies would be wise to prepare for an eventual lifting of the government's ban on exporting domestic crude. But he cautioned there is no certainty the rule will be lifted.
Mears also told Reuters he is not opposed to investing in crude-by-rail assets, but so far Magellan has deemed available assets too pricey.
Many companies are increasingly using rail to move crude from booming domestic oil fields because pipeline infrastructure is lacking. Refiners say crude-by-rail offers them flexibility when choosing what types of crude they will run through their plants.
(Reporting By Kristen Hays; Editing by Terry Wade)