Production of “West Texas Light” is surging, and now the Permian Basin’s newest kind of oil is headed overseas. As production exceeds the demand of US refiners, exports are expected to jump.
Oil companies have sought to separate lighter and less sulfurous crude from West Texas and New Mexico wells, in order to maintain the quality of US benchmark West Texas Intermediate. They found what they were looking for in West Texas Light (WTL), and now the WTL supply has grown to more than half a million barrels per day—almost four times as much as last year.
Although some WTL is purchased by US refiners, most will need to be exported abroad.
That’s because many of the largest refineries in the nation have already invested billions in upgrades to run heavier, dirtier oil. Now, they can only handle a limited amount of lighter oils like WTL.
Overseas shipments of WTL began in February 2019 and are now nearing a total of 1.42 million barrels. Most of that oil goes to the Netherlands and Canada. Thus far none has gone to Asia, but renewed US-led sanctions on Iran could soon provide opportunities in the Asian market as well. South Korea, which currently purchases Iranian condensates, may consider WTL if sanctions mean that importing from Iran will no longer be feasible.
At the moment, about a million barrels of storage has been set aside in the Permian and in Cushing, Oklahoma to market WTL. In addition, some pipes are now accepting it as a proper grade.
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