Refiners across the globe probably thought they were making a safe bet when many of them invested substantial amounts into equipment designed to deal with heavy oil. However, they failed to take into account the boom in production of high quality oil from shale fields.
According to some estimates, the amount of money spent on heavy oil refining equipment by refineries around the world could be as high as US$ 100 billion.
A consultant interviewed by Reuters said, “Companies have invested for a world supplied with heavy and sour crude, but now they find crude is getting lighter and sweeter … The market is going to be way over-supplied with deep upgrading capacity.”
Over the last year, the value of light oil has dropped in the wake of the massive expansion of the US shale industry, whilst heavier grades of crude have actually risen in price, rendering much of the economics behind the decision to expand heavy oil facilities fundamentally flawed.
The problem does not yet show any signs of abating, Michael Wittner, Societe General, New York was quoted by Reuters as saying, “All over the world, oil companies will have to re-evaluate their plans for refining capacity … This is a global issue that oil companies have yet to address.”
Written and edited from various sources by David Bizley
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/19072012/shale_oil_boom_to_hit_global_refiners_hard/