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There is some refinery expansion occurring. In the U.S. it is easier to expand an existing facility than to get government approval for a new facility.
Marathon has planned an expansion of its Garyville refinery by 180,000 barrels.
http://findarticles.com/p/articles/mi_qn4200/is_20070308/ai_n18712309
Currently refinery utilization rates around the world were high. By one scenario oil production will rise faster than refinery expansion, by a different scenario oil production will fall and refinery utilization rates will shrink.
The article doesn't say, but the reason for the expansion could be that they're adding capacity to process heavy sour crude. Not that they believe total oil production will rise.
My understanding is that expansion means exactly what it says and that changing from processing light sweet crude to heavy sour crude is less an act of expansion than of reconfiguration.
Perhaps Robert or Heading Out can shed some light here?
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Robert has said many times that he doesn't see that the US is processing more heavy sour crude than we did 10 years ago, so I believe he doesn't think it's a factor.
I think it makes intuitive sense that we are producing more heavy sour than we used to. This would explain why we have large stocks of crude, many refinery maintenance problems, lower refinery capacity, and more expensive gasoline. Robert doesn't seem to buy it and he has found no stats to really support this idea.
My understanding is that the transition to ULSD (Ultra Low Sulphur Diesel) has lead to more breakdowns. Apparently the process to remove Sulphur involves some pretty maintenance intensive equipment, and when that goes down they have to shut down the refinery to fix it. That is one of the more reasonable explanations I have heard.
Oh and more happy news on the Diesel front, most diesel engine manufacturers are going to SCR (Selective Catalyst Reduction) to meet the 2010 NOx standards. Part of the SCR process includes injecting Urea into the exhaust stream. Unfortunately Urea is derived from Natural Gas.
Yeah, that actually does sound reasonable though again it would be nice if someone can confirm or otherwise explain.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Robert has said many times that he doesn't see that the US is processing more heavy sour crude than we did 10 years ago, so I believe he doesn't think it's a factor
One more time, this is not what I said. There is a clear trend toward heaving and more sour crudes in the past 10 years. My point is that the quality has been relatively stable for a least a few years. In other words, we didn't suddenly develop refinery problems because we are suddenly processing poorer quality crude. The crude quality is almost identical to what it was 2 years ago. That's according to the EIA statistics.
OK, sorry and apologies, but still the EIA stats are not showing a sudden drop in quality of crude entering the US refineries.
Wish I knew what percentage of the refineries in the US could handle what levels of crude quality and what kind of runs they've been using in the last three years. It would be interesting to look at it on a refinery by refinery basis to see if there are any patterns.
The API blogger calls recently discussed that. It is FAR cheaper and years faster to expand existing refineries than to build new refineries. They were saying they added something like the equivalent of 3 new refineries over past ten years by expansion. [check my numbers] Still, I think the point that there will be less oil in the future must play in that. Somewhere I saw an article that oil tankers were not being built for that reason.
cfm in Gray, ME
10 new refineries in 10 years. Total capacity increase of 2 million bpd.