American Oil and Gas Reporter - February 2021 - 61

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SpecialReport: Crude Purchasing

Strategies Optimize Crude Purchasing
By Tim Beims
and Kari Johnson
For four generations, the Maclaskey
name has been associated with crude oil
purchasing and transportation services,
beginning in Eastern Kansas in 1924.
Today, Maclaskey Oilfield Services Inc.
has a fleet of state-of-the-art equipment
for oil and water hauling, well servicing,
pumping and other operations in Kansas,
Oklahoma, Texas and New Mexico.
A lot has changed since Walter L.
Maclaskey-the first generation of crude
oil haulers in the family-transported his
first load on a Model T truck. But just as
it was back then, accurate oil quality and
volumetric measurements are critical for
both the producer and the purchaser. Even
something as subtle and unavoidable as
seasonal shifts in ambient air temperatures
can impact the performance of the gun
barrel and processing equipment, effecting
the emulsion of the production stream
entering storage tanks, especially for lower-gravity and paraffinic oils.
" In the different basins and field pools
in the regions we serve, there are various
specific crude oil characteristics-from
low-gravity heavy asphaltenes to highgravity condensate, " reports Kelly
Maclaskey, president of the El Dorado,
Ks.-based company. " The majority of the
producers we deal with strive to have
their lease crude ready to sell by meeting
merchantable specifications. "
Regardless of the type of produced
crude, Maclaskey says production best
practices are a must for meeting crude
purchasing specifications. That includes
maintaining surface and subsurface equipment in optimal condition, and keeping
gun barrels, water knockouts, continuous-duty chemical pumps, etc., clean and
functioning properly. " Most production
personnel employ best practices to ensure
crude oil is coming into stock ready to
transport and sell, " he relates.
Contractually, oil quality is a key part
of the language of any purchase agreement,
Maclaskey explains, adding that his company not only analyzes oil at the tank
battery before loading to a truck, but also
regularly conducts crude oil spot checks
at various points throughout its operations
to further ensure quality control.

" Quality specifications are part of our
division order purchase agreements, " he
provides, noting that accurate pipeline
grades and measurements govern and
control all settlements. Specifically, the
terms of the agreements include granting
the purchaser the right to determine corrected volume and gravity at a temperature
of 60 degrees Fahrenheit, and deduct
from corrected volumes based on the
percentages of basic water and sediment
(BS&W) and other impurities.
In cases where the quality of the oil is
not considered merchantable, the purchaser
reserves the right to refuse the load. That
gets back to the importance of the producer
developing and adhering to best practices
to ensure merchantable specifications.
" Because of the variances in crude oil
characteristics from one location to the
next, best practices usually need to be
done on a well-by-well and lease-bylease basis, " Maclaskey concludes.
Maximizing Valuations
Jackson, Ms.-based Ergon is a multigenerational family-owned business with
diversified independent refining operations
and crude purchasing, transportation, marketing and storage services. Nick Andreychek
is Ergon's manager of crude and condensate
supply, focused primarily on purchasing
and transporting 25,000-26,000 bbl/d
throughout the Appalachian Basin to supply

the company's refinery in Newell, W.V.
" We buy oil produced in the Utica and
Point Pleasant plays, but our bread and
butter is conventional assets in Pennsylvania,
Ohio, West Virginia and Kentucky, " he
explains. " These are low-volume wells
operated predominately by small companies
and sole proprietorships that generally do
not have supervisory control and data acquisition or automated tank alarms, as one
might see utilized on unconventional pads
and tank facilities. It is old school APIstandard tank gauging on the lease and
making sure we meet customers' service
needs and pick up scheduled loads within
a specified amount of time. "
Ergon has five terminal facilities
throughout the basin that receive the collected oil and use LACT and Coriolis
meters to obtain billable volume and
BS&W measurements to verify manual
tank gauge data obtained at the lease.
" The majority of the crude we receive is
paid through metered data, " he notes.
Conventional Appalachian sandstone
reservoirs yield oil along with natural
gas, albeit at low daily rates compared
with the unconventional shale wells that
dominate drilling programs today. " The
economic viability of these wells hinges
on both crude and natural gas prices,
which have been moving in the right direction, " Andreychek observes. " However,
the produced oil tends to have high

Oil quality remains as important for both the producer and the purchaser as it was in
the 1920s when the Maclaskey family started transporting crude oil in eastern Kansas.
Today, Maclaskey Oilfield Services Inc. employs a number of best practices to help producers meet crude purchasing specifications, including maintaining surface and subsurface equipment in optimal condition, and keeping gun barrels, water knockouts,
continuous-duty chemical pumps, etc., clean and functioning properly.

FEBRUARY 2021 61

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