Commercial Impacts of Butane Blending into Crude Oil

Litigation, North America

A pipeline crude oil quality dispute arose when one shipper on a common carrier pipeline complained that the price of its crude was reduced as a result of butane blending into the pipeline. We explored the butane content of light crude oils, price relationships between butane content and oil price, pipeline throughput impacts and the impacts on petroleum refiners. Baker & O'Brien's expert opinions and reports helped facilitate a settlement.

A crude oil shipper on a common carrier pipeline filed a complaint with the governing agency concerning the financial impact of perceived quality degradation of its crude oil. The shipper's crude oil was blended with other crude oils to produce a commingled stream. The complainant alleged that the pipeline owner was blending butane into the shipper's crude oil up to the pipeline vapor pressure specification, thereby reducing the price that the shipper received for its crude oil.

Baker & O'Brien was engaged to prepare evidence concerning butane blending into crude oil and its associated impacts on transportation systems, petroleum refiners, and the market value of crude oil. Our efforts focused on the: 1) butane content of light crude oils; 2) price relationships between butane content and crude oil price; 3) pipeline throughput impacts associated with butane blending; and 4) butane impacts on petroleum refiners.

Baker & O'Brien prepared an expert report and a subsequent rebuttal report explaining our findings. Our reports assisted in settlement negotiations.

Kevin G. Waguespack

Chief Executive Officer

Industry
Transportation and Storage
Service
Standard of Care / Litigation / Product Quality / Pipeline / Crude Oil Valuation
Region
North America