<DrumBeat: June 30, 2007The Oil Drum"Energy Resources and Our Future" - Speech by Hyman Rickover in 1957>

103 comments on Refinery Utilization Rates and Increase in Use of Heavy/Sour Crudes

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Robert Rapier on June 27, 2007 - 12:18pm Permalink | Subthread | Comments top

I am still on vacation, and probably won't be near a computer when this article posts. So, my apologies for commenting before it goes live. However, since I have commented on this several times, I want to make a note.

In the past, I have said that gravity has been relatively consistent for several years, which indicates to me that refinery utilization issues are not due to a sudden influx of heavy oil. Yes, over the longer term, crudes have heavied up as refiners have installed cokers and hydrocrackers. Due to the economics of processing heavy versus light oil, which I previously discussed here, if a refiner has a coker they are going to prefer heavy oil.

But if you look at the EIA numbers:

http://tonto.eia.doe.gov/dnav/pet/hist/mcrapus2m.htm

You will see that gravity in 2007 is almost the same as gravity in 2001. In fact, just eye-balling it I would say that the average in 2001 is a carbon copy of the average for 2007.

Sulfur tells a similar story - 1.4% in 2001 and 1.4% in 2007:

http://tonto.eia.doe.gov/dnav/pet/hist/mcrs1us2m.htm

I do believe that the lightest, sweetest crude has peaked, but refiners have been installing equipment to process heavy sour crudes. Overall, the product yields will be negatively impacted as this happens, but it didn't suddenly happen in the past 2 or 3 years (according to EIA data, which is data that refiners have reported).

Back to fishing with my boys. I will be back online some time next week, as we fly back to Scotland on June 30th. I won't be commenting a lot after that, but I will comment some.

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PartyGuy on June 29, 2007 - 5:03pm Permalink | Subthread | Parent | Comments top

I look forward to seeing you back, Robert!

BTW...I hope a few individuals take note of the refinery utilization for the past 22 years...

*wink*

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TechGuy on June 29, 2007 - 6:34pm Permalink | Subthread | Parent | Comments top

>You will see that gravity in 2007 is almost the same as gravity in 2001. In fact, just eye-balling it I would say that the average in 2001 is a carbon copy of the average for 2007.

The EIA chart has to be wrong. The price spreads between Light and Heavy are tiny compared to the spreads back in 2004. I don't see how the demand for heavy has risen, while refineries statistic have remained unchanged. Valero was minting money before the spread collapsed. I suppose perhaps the figures may be escewed because of pre-refining upgrades. For instance, Oil produced from tar sands are upgraded before they are sent to refineries for production of consumer fuels.

Perhaps an insider from a refinery can set forward and provide some clarity.

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westexas on June 29, 2007 - 6:47pm Permalink | Subthread | Parent | Comments top

The most recent price data (late May, EIA) show a spread of about $12 between Brent and Maya heavy crude, versus about $6 in late May, 2004.

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TechGuy on June 29, 2007 - 8:39pm Permalink | Subthread | Parent | Comments top

>The most recent price data (late May, EIA) show a spread of about $12 between Brent and Maya heavy crude, versus about $6 in late May, 2004.

Thanks, I thought I had read somewhere that the spreads declined on increased demand, but I guess I was mistaken.

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Mad Max-Out on July 1, 2007 - 9:17pm Permalink | Subthread | Parent | Comments top

The light sweet stuff may have well peaked, but you can be sure that the refineries will install cat crackers to re-use the asphalt/bitumen. As we all know, when the crude goes into the fractionating distilling device, the bottom gets the asphalt. The asphalt can be broken down into smaller molecules in a cat converter or as we will call it a cat cracker. This however takes some amount of natural gas to supply the hydrogen for the cracking process.

The process to make the asphalt from Fort McMurray into "syncrude" does take a bunch of nat-gas. But nonetheless, the process of making heavy sour crude into something that can be refined is in progress. That does mean that asphalt will get expensive enough that fixing roads will eventually get too expensive. The asphalt from Fort McMurray is the mother of all heavy crudes. They dig it up as like strip mining. Then, it's made into "syncrude" to be pumped through pipelines to refineries. Then, after that journey, it's made into the gasoline, of course.

Petrol prices high enough yet? Just wait!

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