Fears of Contamination Prompt More Quality Checks of WTI Midland Crude

Pipeline operators and oil exporters have increased routine checks of the quality of the WTI Midland crude after a cargo was found to fail to meet the specifications of the grade due to higher content of metals, Reuters reported on Wednesday, quoting sources with knowledge of the matter.  

This year, Energy Transfer discovered a batch of WTI Midland not meeting the specifications, Executive Vice President Adam Arthur said in June.

Pipeline operators and crude exporters tend to mix WTI Midland with cheaper crudes such as Domestic Sweet, West Texas Sour, or Eagle Ford, but these less expensive varieties often contain higher levels of nickel, iron, and vanadium.

Higher levels of iron and vanadium could damage some refineries in Europe, where U.S. crude is flowing in growing volumes. European refineries typically have less complex processing units that cannot separate the excess quantities of metals.

The routine checks have been stepped up this year as pipeline and export terminal operators look to meet all the specifications of WTI Midland crude per the Platts classification.

Concerns have emerged that excess metals quantities could damage the reputation of the crude grade from Texas which is now part of the Brent basket of grades after S&P Global Platts added WTI Midland to the Dated Brent Index in June this year.

In less than a decade since the export ban was lifted in late 2015, U.S. oil has become so significant for the global market that WTI Midland was added in June to the Brent basket of crude oil grades that is used as a benchmark for pricing the world’s most traded oil contract.

The reason WTI Midland is becoming more and more important in the Dated Brent assessment is the record-high volume of U.S. crude being shipped abroad, which has averaged around 4 million barrels per day (bpd) since the start of the year.   

By Tsvetana Paraskova for Oilprice.com

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