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Let's list the reasons for high oil prices ...
Re: Let's list the "reasons" for the high prices .
by kmann » Tue 25 Apr 2006, 11:11:13
I've seen at least two posts on refineries not being able to handle heavy sour crude. Does anyone have authoritative info on what percentage of refinery capacity in the US can handle the lower grades, and the comparative yield?
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kmann - Tar Sands
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Re: Let's list the "reasons" for the high prices .
by nth » Tue 25 Apr 2006, 11:54:00
$this->bbcode_second_pass_quote('kmann', 'I')'ve seen at least two posts on refineries not being able to handle heavy sour crude. Does anyone have authoritative info on what percentage of refinery capacity in the US can handle the lower grades, and the comparative yield?
Sadly, that is not how the refining business work, but you can look up EIA refinery information and look at cracking capacity to gage how much sour crude processing is available in US.
I just want to clarify some misconceptions:
1. US is leader in sour crude refining capacity. You can look at total capacity or percentage of capacity and both are very high.
US just simply have lack of capacity to refine, period as far as meeting demand. This puts stress on EU and other refineries in the world. EU and Japan are weak in sour crude compare to US.
2. If a refinery can handle sour crude, does not mean it can handle any sour crude. Refineries in US are often build in modules. So if you got heavy sour crude, then it goes through passes on different units to refine it to certain grade and so on to distill the different grades of petro product and then to enrich certain premium products like gasoline. (I am not an expert, so my verbage maybe incorrect.) By using heat, pressure, and other ingredients including catalysts, you can create more gasoline from these heavy oil. As for sour part, that means high sulfur content. They will use different methods to separate the sulfur and produce sulfur compounds like sulfate, sulfuric acid, etc.... These processes increase energy consumption and also create unwanted by products, thus reducing yield. A heavy sour crude refinery can process light sweet crude, but not the other way around due to light sweet crude not having these cracking units and cokers. When they say heavy sour refineries prefer heavy sour rather than sweet, it just means the heavy sour refineries invested hundreds of millions of dollars to buy and install these additional units and in order to justify that investment, they will stay away from processing sweet crude. Also, different oil grades from different fields will result in refineries having to reset their units to optimise production. That is why they hate to change oil sources. This requires costly slowdowns and down time.
I hope this clarifies the business a little bit.
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nth - Heavy Crude
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Re: Let's list the "reasons" for the high prices .
by kmann » Tue 25 Apr 2006, 13:22:28
Thanks nth. I found an EIA document that breaks down refinery capacity. It appears that my question does not have a simple answer.
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kmann - Tar Sands
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