Condensate is an ultra light oil similar to gasoline that is sourced from shale. It is mostly a gas when underground, but becomes a liquid when pumped to the surface. Today, up to 12 percent of daily crude oil production qualifies as condensate.
Condensate was the oil boom’s redheaded stepchild. But yesterday, the Commerce Dept. indicated that selling condensate abroad might be simpler than previously thought. By granting permission to two Texas energy companies to sell condensate abroad, the federal government cracked open the door that could lead to exports of unrefined oil previously prohibited under the longstanding export ban.
The ban has its roots in the Arab oil embargo of the 1970s and restricts shipments of raw crude and condensate.
Now these companies have permission to minimally process condensate in the oil field – avoiding a trip to the refinery or splitter – and using a different method to stabilize and distill it. This seemingly subtle change to the rules could have wider reaching implications and pave the way for more relaxing of the oil export ban.