A Crude Oil Assay

What Is a Crude Oil Assay?

Crude oil is literally crude. To be useful, it must be processed in a refinery to separate out individual finished products: gasoline, diesel, jet fuel, heating oil, and residual fuel. There are several hundred grades of crude oil produced worldwide, each with different characteristics. Crude is not always black; it can range from straw-colored to dark brown. Its viscosity can vary from water-like to near-solid.

The characteristics of an individual grade are defined in an analysis called an assay, prepared on behalf of a producer for sales purposes. An assay outlines the properties most important to a refinery: expected yields of various finished products, density, sulfur content, acidity, and viscosity. Crude oil delivered outside its tight assay specifications is called "off spec" and can result in expensive delays or steep discounts.

Density: The Most Important Property

Density is the single most important physical characteristic in an assay because it indicates which hydrocarbon molecules the crude contains and thus which products it will yield when refined. Heavy crudes are denser because they contain larger molecules. Lighter crude is generally more valuable as it readily yields high-value products like gasoline.

The industry standard measurement is API gravity, created by the American Petroleum Institute in 1921 on a scale from 0 (heaviest) to above 100 (lightest). Water has a density of 10 degrees API. WTI crude, traded on NYMEX, is 39.6 degrees API (intermediate). Crudes in the 30-39 degree API range are most commonly produced and in highest demand. The formula is: degrees API = (141.5 / Specific Gravity) - 131.5.

Condensates (above 50 degrees API) are sometimes called the "champagne of crude oils" because they are so easily refined into high-value products like gasoline.

Sweet vs. Sour: Sulfur Content

Sulfur content lowers crude value. Sulfur displaces hydrocarbon molecules (reducing energy content), corrodes metal piping, and becomes a pollutant when burned. Crude with less than 0.5% sulfur by weight is "sweet"; above 1.5% is "sour." The term sour references the distinct rotten-egg smell of sulfur-laden crudes. WTI is sweet at 0.24% sulfur; Brent Blend is slightly higher at 0.37%.

At extremes, crudes tend to be either light-sweet or heavy-sour, because sulfur binds more easily to heavy, complex hydrocarbon molecules. The proportion of sour crude in global production has been increasing as more heavy crude is produced, particularly from Canadian oil sands and deepwater fields.

Other Key Assay Properties

Viscosity defines how easily a liquid flows. Heavy crude is highly viscous and often must be heated or blended with lighter products to move through pipelines.Pour point is the lowest temperature at which crude behaves as a fluid.Acidity (measured by Total Acid Number, or TAN) indicates how much neutralization is needed before processing. Vapor pressure indicates how readily the crude evaporates, with higher values suggesting more light, valuable products.

The price chart above reflects WTI, a light-sweet intermediate crude. The price differential between WTI and heavier, sourer grades like Dubai or Maya can swing dramatically depending on refinery capacity and demand for specific products. Understanding assay properties is essential to understanding why different crudes trade at different prices.