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Less petroleum and other liquids consumed in US comes from refineries

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Hydrocarbon Engineering,

The US Energy Information Administration’s (EIA) latest Short-Term Energy Outlook (STEO) forecasts that in 2021, US consumption (as measured by product supplied) of total petroleum and other liquid fuels will average 20.71 million bpd, surpassing the 2007 pre-recession level. However, since the 2007 – 09 recession, the fastest-growing components of US liquids consumption growth have not been fuels such as motor gasoline or distillate fuel but rather hydrocarbon gas liquids (HGLs) and ethanol – two components that are mostly or almost entirely produced outside of petroleum refineries. Petrochemical facilities consume HGLs as feedstocks in the growing production of plastics, resins, and other materials, and ethanol is blended with gasoline.

HGLs and ethanol consumption have collectively grown from 2.6 million bpd in 2007 to 4.1 million bpd in 2019. The remaining portion of total petroleum and other liquids consumption – nearly all of which comes from petroleum refineries – has fallen from 18.0 million bpd in 2007 to 16.4 million bpd in 2019. In 2021, EIA forecasts that US demand for principally refinery-produced products will average about 16.3 million bpd, similar to its 1997 level.

HGLs – a group of products that includes ethane, propane, normal butane, isobutane, natural gasoline, and refinery olefins – shave been the main driver of US petroleum and other liquids demand growth since 2007. Domestic production and consumption of HGLs have increased with rising natural gas production and rising petrochemical sector demand. As a result, EIA forecasts US HGL consumption will average 3.45 million bpd in 2021, or 1.27 million bpd more than in 2007.

Except for jet fuel, EIA expects less US consumption of refinery-produced products in 2021 than in 2007. For example, declines in the use of heating oil for space heating and transportation efficiency gains have limited the increase in distillate consumption in the US. Consumption of the petroleum-based component of US motor gasoline has yet to surpass pre-recession levels because of increased vehicle fuel efficiency and increased blending of ethanol, which is almost exclusively produced outside of petroleum refineries. EIA forecasts that the US will consume 570 000 bpd less refinery-produced gasoline in 2021 than in 2007, but ethanol consumption will be 490 000 bpd higher.

Some HGLs can be produced by both crude oil refineries and natural gas processing plants. HGL production at natural gas processing plants has risen along with US natural gas production. EIA expects HGL production from natural gas processing plants to continue to increase to 5.5 million bpd in 2021. Meanwhile, refinery HGL production has remained flat in recent years at about 600 000 bpd.

The large increase in US HGL production and the resulting low prices have led to large investments in US infrastructure to extract and transport HGLs to market and investments in petrochemical facilities to consume HGLs. Many of these facilities consume HGLs as feedstocks in the production of plastics, resins, and other materials.

Principal contributor: Mason Hamilton

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