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US Gulf Coast refining

Hydrocarbon Engineering,

In this article the author examines the US Gulf Coase region, also known as Petroleum Administration for Defence District 3. This district is made up of six states: Alabama, Arkansas, Lousiana, Mississippi, New Mexico and Texas.

The USGC is a focal point for many aspects of the country’s energy sector: a major oil and gas producing area, the site of the US Strategic Petroleum Reserve, a sizeable oil and energy market, the country’s chief hub for international oil trades, the site of the country’s largest concentration of refineries and petrochemical facilities, and the nexus of many of the nation’s key oil and refined product pipelines.

Oil and gas reserves
Texas contains 77% of PADD 3’s proven oil reserves, approximately 4.6 billion bbls. Total PADD 3 reserves equal 5.9 billion bbls, 31% of total US reserves. However, reserves are declining by approximately -3.4%/y. In contrast, dry natural gas reserves have recently been revised upward. In 2008, reserves were approximately 115.3 trillion ft3.

Crude production and imports
PADD 3 has maintained high levels of crude output, however both US and PADD 3 production is falling. The USGC remains an important crude producing region, but naturally as US output has fallen, dependence on foreign crude imports has risen. USGC refiners are overall purchasing a crude slate that is turning heavier and higher in sulfur.

PADD 3 demand and balance
Demand was fairly strong averaging 2$/y from 1989 – 2000. From 2000 – 2009 however, demand declined at a rate averaging -1.2%/y. PADD’s current market demand is 4.87 million bpd.

A balanced pattern of demand enables the PADD3 market to export large volumes of essentially every class of product. The USGC produces an exportable surplus of 2.5 million – 3.2 million bpd of finished products.

USGC refining
By 2009 US capacity had risen to 17.67 million bpd, while PADD 3 capacity had grown to 8.44 million bpd, 48% of the US total. PADD 3 contains 51 refineries, 23 of which are in Texas and 18 are in Louisiana. These states account for almost 92% of the total USGC refining capacity.

PADD 3 refinery output declined from 8.53 million bpd in 2004 to 7.37 million bpd in 2009. The output pattern included 39% naphtha and gasoline and 38% middle distillates.

PADD 3’s importance to US product supply
With 58% of the country’s crude production, nearly one half of the country’s refining capacity, a sophisticated refining industry, with coastal access to low cost feedstocks, a balanced pattern of petroleum product demand that ranges from 2.5 million – 3.2 million bpd below refinery output, and transit connections to external markets via sea, road, rail, and pipeline, PADD 3 is one of the keys to meeting US demand for fuel.

Of the five PADDs in the US, PADD 3, the USGC region, stands out as the country’s premier region in oil production, processing and transport. The USGC in fact stands out as one of the most important oil regions in the world.

The USGC oil sector maintains an impressive inventory of physical and human resources and also a successful balancing of supply and demand in a changing world.

You can read Nancy Yamaguchi's full article in the March 2010 issue of Hydrocarbon Engineering.

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