When all that remains is heavy/sour, who's going to build/refurbish the refineries and where?

It's being done. Lots of refiners are installing cokers, primarily to take advantage of a large light/heavy price differential. Hydrotreaters/hydrocrackers are also being installed to handle sour crudes. However, it is a substantial capital investment, and with margins where they are some of these projects are likely to be delayed, and some that are still on the drawing board may be scrapped. If there was certainty that last summer's margins would return, everyone who doesn't have a coker would install one.

Interestingly, the smartest, forward-looking folks on heavy/sour refining have been the Indians, specifically Mukesh Ambani of Reliance, who in one year built an enormous, 500,000 b/d heavy/sour refinery in Jamnagar to process Saudi heavy and other such crudes. Then he did it again -- doubled the refinery's size, again in a year. Jamnagar has a 1-million- barrel-a-day capacity now. I met Ambani in Bombay for a story for the Wall Street Journal a couple of years ago. Unlike the flat-footed U.S. and European majors, Ambani is quick-thinking, decisive and willing to commit enormous resources to execute his ideas. The result is enormous profits. He's one of the world's richest men now.

Steve LeVine, author
The Oil and the Glory
http://www.oilandglory.com