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Researched by Industrial Info Resources (Sugar Land, Texas)--The notion that U.S. refiners can't handle the new wave of "super light" domestic crude oil is a myth, according to American Fuel & Petrochemical Manufacturers (AFPM) (Washington, D.C.). Officials with the trade group cited the results of a newly released survey of their membership.
The survey results indicate U.S. refineries could increase their intake of super light crude (42 to 50 degrees API gravity), by at least 1.5 million barrels per day (BBL/d) through 2016. A total of 23 companies provided information on 69 refineries that represented 61% of U.S. refining capacity, according to AFPM.
Industrial Info is tracking 759 active U.S. refinery projects worth $32.64 billion.
AFPM President Charles Drevna said during a conference call Wednesday that the survey was aimed at clearing up some of the misunderstandings regarding refinery use of growing U.S. crude oil production.
"For so long, we have based decisions on fiction, or aspirations, and not fact," he said. The idea of a "no vacancy sign at U.S. refineries for light sweet crude" is false, he added.
The survey report said that while most U.S. refiners have added the capability to process heavy sour crude oils, most of the recent growth in U.S. oil production has come from tight oil formations, which have very light and sweet crude.
"These two facts ... have created much confusion and misunderstanding about U.S. refiners' capability to use the increasing volumes of light sweet crude being produced and the economics around the issue," according to the report.
The AFPM report said the survey results indicate the respondents have more than enough processing capability to absorb all new U.S. super light crude oil production through 2016, as projected by the U.S. Energy Information Administration (EIA). Total production in the lower 48 states is forecast to increase 720,000 BBL/d from 2014 to 2016.
The survey respondents indicated they planned to increase their use of super light crude by more than 730,000 BBL/d. "Furthermore, if logistics access to the new crude oil were not an issue and economics supported increased use of this oil, the respondents have the capability--in place or in progress--to run an additional 800,000 barrels," for a total of 1.53 million BBL/d.
The report noted that nearly 40% of the refining industry did not complete the survey, indicating the amount of super light crude that can be processed in the U.S. is larger than indicated by the survey results. Refiners in the Gulf Coast had the highest response rate in the survey, at 64%, while those in the Rocky Mountains and West Coast regions had the lowest response rates, at less than 50%.
The idea that U.S. refineries are unable to process the new super light crude should not be used in the debate over whether the U.S. should lift its ban on crude exports, Drevna said.
While logistics and distribution issues continue to be an issue for refiners who seek to process more crude, some of those problems, such as the bottleneck at the terminal complex in Cushing, Oklahoma, have largely dissolved, said AFPM Chief Industry Analyst Joanne Shore.
The survey respondents indicated investments of more than $5 billion from 2013 through 2016 to increase their capacity to process light crude oil. In context, the report said, the total U.S. refining sector accounts for about $10 billion per year of capital expenditures (capex).
Industrial Info is tracking 291 active U.S. refinery projects, worth $7.66 billion, that are set for kick-off this year.
Quantum Energy Incorporated (Oklahoma City, Oklahoma) plans to kick off construction this year of a 20,000-BBL/d hydro-skimming refinery near Baker, Montana. The project, which could see completion in first-quarter 2017, has a total investment value of $500 million. Quantum Energy is working with engineering and services firm Bilfinger Westcon Industries Inc. (Bismarck North Dakota) on the project. Quantum Energy has proposed development of five 20,000-BBL/d refineries in North Dakota and Montana.
For related information, see August 11, 2014, article - Calumet, MDU Bet on Bakken Shale with 20,000-Barrel-per-Day Joint-Venture Refinery.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
The survey results indicate U.S. refineries could increase their intake of super light crude (42 to 50 degrees API gravity), by at least 1.5 million barrels per day (BBL/d) through 2016. A total of 23 companies provided information on 69 refineries that represented 61% of U.S. refining capacity, according to AFPM.
Industrial Info is tracking 759 active U.S. refinery projects worth $32.64 billion.
AFPM President Charles Drevna said during a conference call Wednesday that the survey was aimed at clearing up some of the misunderstandings regarding refinery use of growing U.S. crude oil production.
"For so long, we have based decisions on fiction, or aspirations, and not fact," he said. The idea of a "no vacancy sign at U.S. refineries for light sweet crude" is false, he added.
The survey report said that while most U.S. refiners have added the capability to process heavy sour crude oils, most of the recent growth in U.S. oil production has come from tight oil formations, which have very light and sweet crude.
"These two facts ... have created much confusion and misunderstanding about U.S. refiners' capability to use the increasing volumes of light sweet crude being produced and the economics around the issue," according to the report.
The AFPM report said the survey results indicate the respondents have more than enough processing capability to absorb all new U.S. super light crude oil production through 2016, as projected by the U.S. Energy Information Administration (EIA). Total production in the lower 48 states is forecast to increase 720,000 BBL/d from 2014 to 2016.
The survey respondents indicated they planned to increase their use of super light crude by more than 730,000 BBL/d. "Furthermore, if logistics access to the new crude oil were not an issue and economics supported increased use of this oil, the respondents have the capability--in place or in progress--to run an additional 800,000 barrels," for a total of 1.53 million BBL/d.
The report noted that nearly 40% of the refining industry did not complete the survey, indicating the amount of super light crude that can be processed in the U.S. is larger than indicated by the survey results. Refiners in the Gulf Coast had the highest response rate in the survey, at 64%, while those in the Rocky Mountains and West Coast regions had the lowest response rates, at less than 50%.
The idea that U.S. refineries are unable to process the new super light crude should not be used in the debate over whether the U.S. should lift its ban on crude exports, Drevna said.
While logistics and distribution issues continue to be an issue for refiners who seek to process more crude, some of those problems, such as the bottleneck at the terminal complex in Cushing, Oklahoma, have largely dissolved, said AFPM Chief Industry Analyst Joanne Shore.
The survey respondents indicated investments of more than $5 billion from 2013 through 2016 to increase their capacity to process light crude oil. In context, the report said, the total U.S. refining sector accounts for about $10 billion per year of capital expenditures (capex).
Industrial Info is tracking 291 active U.S. refinery projects, worth $7.66 billion, that are set for kick-off this year.
Quantum Energy Incorporated (Oklahoma City, Oklahoma) plans to kick off construction this year of a 20,000-BBL/d hydro-skimming refinery near Baker, Montana. The project, which could see completion in first-quarter 2017, has a total investment value of $500 million. Quantum Energy is working with engineering and services firm Bilfinger Westcon Industries Inc. (Bismarck North Dakota) on the project. Quantum Energy has proposed development of five 20,000-BBL/d refineries in North Dakota and Montana.
For related information, see August 11, 2014, article - Calumet, MDU Bet on Bakken Shale with 20,000-Barrel-per-Day Joint-Venture Refinery.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
