North American Condensate

Overview

EAI, Inc.'s North American Condensate Study focuses on the supply, demand, logistics and pricing outlook for North American condensate and other key streams that impact the market for condensate including light crudes, bitumen and NGL-pentanes plus derivative products. EAI, Inc. is drawing on its North American Crude Supply, Logistics, Refining and Pricing Outlook study and supporting work addressing all North American light crude/tight oil basins, the outlook for Canadian bitumen production, light crude logistics, costs and pricing relationships across all major crude hubs and crude grades as major inputs to this study. The overall North American Condensate study content and associated input and output value road map is shown below:

Integrated Analysis and Outlook for North American Condensates and Related Streams

EAI, Inc. will develop an integrated summary addressing outlook for condensate supply, demand, logistics and pricing in North America with a parallel assessment of relevant global business drivers. This integrated analysis and business outlook will address at least the following topics:

• Production outlook for North American condensate by grade category
• Outlook for light crude production and capability to absorb North American condensate supply
• Outlook for condensate demand to support diluent blends
• Overall supply, demand and pricing outlook for North American condensate
• Assessment of condensate pricing relative to light crude streams and derivative products

Condensate-Light Stream / NGL Network Characterization

The North American supply – demand network for condensate, NGL, and very light crude is characterized providing a detailed look at production regions, demand areas, and transportation infrastructure including new/on-going pipeline projects.

Condensate-Light Stream, NGL and Pentanes Plus Network Balance Forecast

EAI, Inc draws on its production outlooks, market outlooks and logistics capability analysis to develop overall condensate – very light crude balances and forecasts with the underlying behavior of the major contributing components defined. This supports the identification of opportunities and likely associated timelines. EAI, Inc.'s balances lend support in determining the prospective boundary for blending of condensate with light crudes and both condensate and light crudes with heavier crudes in order to displace foreign medium sour crude grades.

Network balances also provide an outlook for U.S. based condensate supply and the draw on this supply to satisfy Western Canada bitumen and heavy crude blending requirements. This will include the logistical capability to service this market with existing and planned pipeline and rail capabilities. The point at which condensate supply exceeds the Canadian blending requirement, light crude blending maximum allowable limits and base refinery feedstock markets, this is a key trigger point where surplus condensate drives the splitter market and incremental condensate clearing prices assuming its supported by the export market for the resulting processed splitter products.

Market Outlook

EAI, Inc. evaluates the market for condensate including price drivers and relationships as well as assessing key demand centers and market outlets.

• Pricing Dynamics
• Canadian Diluent Blending Demand
• U.S. Crude Blending Demand
• Chemicals and Naphtha Market
• Splitter Product Market

Production Outlook

EAI, Inc. production coverage is focused on quantifying production scenarios for condensates and very light crude grades in the major producing areas of the U.S. These areas include Eagle Ford, Permian Basin shales, North Texas – Oklahoma Granite Wash, OK-KS Mississippian Lime, DJ Basin Niobrara, Wyoming Green River Basin, PA-OH Utica and others.

• Gulf Coast Onshore Production Forecasr (Eagle Ford, Permian Basin)
• Rocky Mountain Production Forecast
• U.S. Central Corridor Production (Bakken, Mississippi Lime, Granite Wash, Utica-Marcellus)
• Forecast of Condensate Supplies from Other Sources (Offshore GOM, Eastern Gulf Coast Onshore, Other Shale Plays)

The deliverables included the Condensate Supply and Distribution Strategy Support study program are summarized below:

• Five printed copies of the study
• Consultation on client specific topics and issues as long as they are within reasonable bounds of the original study Scope of Work
• Information and data support in Excel format
• Copies of the complete Executive Summaries, Business Component Summaries and information support tables sent electronically and/or made available online.
• A formal presentation presenting the program results and addressing specific Client inquiries can be provided to the client upon request