Components of Oil Liquids

What Makes Up "Oil Liquids"?

Total worldwide oil liquids production is approximately 104 million barrels per day as of 2026, up from about 85 million bpd when Oil 101 was first published. This total is not just conventional crude oil. It is composed of several distinct components, each with different characteristics and economics.

Conventional Crude Oil

Conventional crude is what most people think of when they hear "crude oil." When removed from a reservoir, it is a hydrocarbon liquid with a density between 10 and 50 degrees API. Refineries are typically configured to run a narrower range, such as 30-35 degrees API. Conventional crude production has struggled to grow significantly since 2005, and the growth in total oil liquids has largely come from other components.

Condensates

Condensates are very light hydrocarbons (above 50 degrees API) that exist as gas at reservoir temperatures and pressures, then condense to liquid at the surface. They are highly valuable because they require minimal refining to produce gasoline and other light products. Simple "condensate splitters" can process them without the expensive cracking and coking units that heavier crudes require. The US shale revolution has dramatically increased condensate production, particularly from the Permian Basin and Eagle Ford.

Natural Gas Liquids (NGLs)

NGLs are very light hydrocarbon molecules (ethane, propane, butanes, and natural gasoline) that are gases at atmospheric conditions but easily compressed or cooled into liquid form. NGLs are separated from the natural gas stream in gas processing plants. As of 2026, US NGL production exceeds 6 million bpd, driven by prolific shale gas output from the Marcellus, Haynesville, and Permian basins. NGLs are crucial feedstocks for the petrochemical industry, particularly ethane for ethylene production.

Unconventional Crude Oil

Unconventional crude requires special processing before it can be refined as conventional crude. The three main sources are oil sands (primarily from Canada and Venezuela), methane/coal-based syncrude (Fischer-Tropsch synthesis), and historically, shale oil (kerogen, not to be confused with tight oil from shale formations).

Canadian oil sands production has grown to approximately 3.5 million bpd by 2026, producing heavy crude (8-12 degrees API) that must be either upgraded to synthetic crude oil or blended with lighter diluents (condensate or naphtha) to flow through pipelines. The two main extraction methods are surface mining and in-situ techniques like Steam Assisted Gravity Drainage (SAGD).

"Refinery gain" is the reason oil output from a refinery occupies more space than inputs, even though weight is unchanged. Heavy dense molecules are cracked into a larger number of light molecules that occupy more space. Think of it as making popcorn.

2nd Edition Update: The Shale/Tight Oil Revolution

The following section is new to the 2nd edition.

The most consequential development since Oil 101 was first published has been the rise of tight oil production from shale formations, primarily in the Permian Basin, Bakken, and Eagle Ford. Using horizontal drilling and hydraulic fracturing, US tight oil production has grown from near zero in 2008 to over 9 million bpd by 2026. This is light-sweet crude (typically 40-45 degrees API), which is distinct from "oil shale" (kerogen), discussed in the first edition as economically impractical.