An oil industry group pushing NYMEX parent CME Group to impose tougher quality standards on its light sweet crude futures contract expects an answer sometime this year, the head of the Crude Oil Quality Association said Tuesday.
Harry Giles, the association's executive director, said the current specifications covering API gravity and sulfur content are inadequate to describe the quality of crudes moving in and out of Cushing, Oklahoma, the delivery point for the NYMEX futures contract.
Giles said the group has done extensive testing to arrive at a wider array of specifications that would give refiners a better picture of the crude streams heading their way. He said NYMEX should also define metals content like nickel and vanadium, micro carbon residue, acid number and distillation yields.
"We think this will be a very important step in helping to ensure the quality of the WTI that's trading at Cushing," Giles said. "It will help to minimize indiscriminate blending, like putting a little bit of a very high sulfur heavy crude oil into a lighter stream -- it does not change the API or the sulfur but it adds micro carbon residue, it adds metals, it affects the yields on that crude."
Giles made the comments at the National Academy of Sciences in Washington, where a panel of industry experts and scientists is studying whether pipelines carrying diluted bitumen from oil sands mining face higher rates of rupture than pipelines carrying conventional crude oil.
CME's director of energy research said in October 2011 that it was still conducting internal discussions about adding new parameters to the NYMEX contract and working out a testing scheme.
The contract currently provides specifications for API gravity, sulfur content, pour point, viscosity and vapor pressure.
Members of the crude quality association voted in 2010 to recommend new specifications for NYMEX, given increased blending of Canadian oil and other grades at Cushing.
The proposal included a micro carbon residue limit of 2.4% or less by weight, a total acid number of 0.28 mg KOH/g or less, a nickel content of 8 ppm or less, a vanadium content of 15 ppm or less and a high temperature simulated distillation yield of 50% between 470 and 570 F.
