Gordon Furbush

US Oil Refinery Fexibility

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(edited)

I only follow the news around US refineries from an investor's perspective, so forgive me for asking stupid questions:

Why are US refineries so dependent on Saudi sour crude?

Why can't the US refine its own oil?  (Or is it that we just have minimal capacity?)

Is anyone working on designing and building a refinery that is less dependent on the grade and sulfur content of the oil?

Edited by Gordon Furbush
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(edited)

There was a gradual decline of sweet crude oil resources in the U.S. over time so that a shift to sour crude was being made over several years since it was more abundant.  Then shale fracking changed things in the U.S. and made sweet crude oil more abundant again. Generally, sweet crude oil is scarcer than sour crude oil which is more abundant in most of the world.

Edited by canadas canadas

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(edited)

That bolsters the argument that we need to build refineries that are more flexible.  Can we isolate particular parts of a refinery that are dependent on the grade and other characteristics of the oil?  Can these parts be componentized and swapped as needed?  Or better yet, be redesigned to adjust to the characteristics of any type of oil?

Edited by Gordon Furbush

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(edited)

1 hour ago, Gordon Furbush said:

That bolsters the argument that we need to build refineries that are more flexible.  Can we isolate particular parts of a refinery that are dependent on the grade and other characteristics of the oil?  Can these parts be componentized and swapped as needed?  Or better yet, be redesigned to adjust to the characteristics of any type of oil?

Not profitably from my understanding.

It is difficult and expensive -but not impossible- to make heavier fractions from light oil or petroleum gas. 

For example, think of the price differential between regular and fully synthetic motor oil... you don't burn synthetic lubricants on purpose.

Edited by Enthalpic

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So, if I understand correctly, you can get a wider variety of petroleum end products from heavier oil.  That suggests it makes sense to have specialized refineries that process WTI into lighter products, such as gas and propane.  Do we have such refineries and can they produce lighter products at the same scale as the refineries built to process heavier grade oil?

Of course, under the current circumstances, these questions are moot.  But are relevant when looking into the future of oil refining.  To be truly energy independent, the US needs the ability to refine its own oil.

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Check what the new refineries will be doing;

www.meridianenergyinc.com

Engineering green refineries primarily for shake, and built close to the source.

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On 5/4/2020 at 7:52 PM, Richard Snyder said:

Check what the new refineries will be doing;

www.meridianenergyinc.com

Engineering green refineries primarily for shake, and built close to the source.

The link isn't working for me.  Is it broken?

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On 5/4/2020 at 2:55 PM, Gordon Furbush said:

I only follow the news around US refineries from an investor's perspective, so forgive me for asking stupid questions:

Why are US refineries so dependent on Saudi sour crude?

Why can't the US refine its own oil?  (Or is it that we just have minimal capacity?)

Is anyone working on designing and building a refinery that is less dependent on the grade and sulfur content of the oil?

Decades  ago pre-shale, US production was in a decline and most refineries were built even before that were designed and configured to run heavy medium and some light crudes like Arabian Light but mostly sour crudes with higher sulphur because that is what was readily available. Since the shale boom , the supply of light sweet low sulphur crudes has been abundant . Most integrated oil companies and also some independents have expanded their refining capacities and added units to process the shale crudes coming out of the eagle Ford, Permian , Bakken and other basins. So yes , US refineries are refining a lot of US crude now and will be adding capacities to include more US crude. You can see the US crude oils replacing imported barrels.

Refineries are also capable of blending various crude oils to obtain an end product slate to meet their customer and market demands. There is no refinery that will just process only one type of crude oil , so there you go a given refinery will use a wide range of crude oil streams to blend and refine including heavy sour, medium sour, light sweet, shale crudes, medium sweet and so on and even condensates and even other distillates.

You can build a refinery just to run sweet shale crude oil.

A new refinery was built in ND to run the Bakken crude and provide certain fuels for the local market but with the Bakken boom that slowed, the demand for the fuels in the oilfields and other industries dropped and that refinery was shuttered as the owners were losing $$$ and now that refinery has been repurposed or in the process of being repurposed.

 

We are building a 'custom" fuels refinery along the USGC and another one as well, that will be using shale crude oils for producing ultra clean fuels.

With some new technologies that have come into the picture, investing in a refinery, which costs a lot of money , now seems not so essential. The new techs can reduce the costs dramatically and with a lot smaller environmental foot print than a refinery , are more feasible and suitable for operations in today's environment, pun intended, while producing ultra clean low emissions fuels.

 

 

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