Refining US petroleum

Overview

• The report highlights the results of the voluntary survey developed by the AFPM and administered by a third party.
• Respondents represent 61% of US refining capacity.
• Highest response rates came from the Gulf Coast, Eat Costa and Midwest regions.
• Respondent industry subset indicates that from 2014 – 2016, they plan to increase their use of super light crude oil by over 730 000 bpd.
• If logistics access to the new crude oil were not an issue and economics supported increased use, the respondents have the capability, in place or in progress, to run an additional 800 000 bbls in 2016.
• Respondent subset has a capacity to refine 1.5 million bpd more super light crude oil in 2016 than they processed in 2014.
• Survey indicates that the subset has more than enough processing capability to absorb all new US super light oil production that the EIA is projecting through 2016.

Actual and planned crude use

• Condensate inputs were not considered in this survey.
• From 2014 – 2016, the respondents are planning to increase their use of super light crude oil over 730 000 bpd.
• With approximately 40% of US capacity not represented in the survey, total industry plans to increase super light crude oil use would be even higher, according to the AFPM.
• Super light crude oil inputs, as a share of inputs excluding condensates, doubled from 7% in 2007 to 14% in 2013.
• By 2016, this category is projected to make up 24% of the inputs, as a shares of light and medium crude oil inputs decline.
• Heavy crude oil maintains its proportion of total crude use.
• The period from 2013 – 2016 presents some differentials from the 2007 – 2013 historical period, but heavy crude maintains its proportional share of crude use.

Capability to run increasing US crude production

• US refiners set their plans based on individual outlooks.
• Refiners’ near term plans do not necessarily reflect what their facilities are currently capable of doing under different circumstances and economic considerations.
• The main increase in crude capability was in the super light category.
• If respondent refineries ran an additional 1.5 million bpd of super light in 2016 than in 2014, they would reduce 446 000 bpd of light crude imports over those used in 2014.
• For PADD 2 respondents to increase their use of super light crude oil over their plans, they would likely decrease their use of light oil a little more than already planned.
• Consistent with PADD 2 planned inputs, this regions shows a net decline in the capability total of light plus super light crude oil.
• PADD 3 would change from its planned increase in light crude use, to a decrease in light crude use as additional volumes of super light crude were used.
• Consistent with planned volumes, PADD 3 total light plus super light capability is increasing.

Changing crude unit yield patterns

• When comparing 2007 – 2016, respondents see increases in the yields of lighter streams, while heavier streams decline.
• The shifts from 2007 – 2016 are not unusually large; however, the aggregate numbers can mask the yield shifts that individual refiners may experience.
• Plans indicate few investments planned for downstream of the crude unit relative to other investments to use more US light crude oil.

Paths to using more US light crude oil

• The largest increase in refiners’ use of US light crude oil came from infrastructure changes that allowed for increased delivery of the oil to refiners.
• CDU investments are expected to have a larger input than import replacement in the two future years.

Investments in refining and infrastructure

• Respondents reported over US$5 billion of project investments during 2013 – 2016 to gain approximately 2 million bpd of increased capacity to process the light crude oil.
• In context, the total US refining sector accounts for approximately US$10 billion/y of capital expenditures.
• Investing in delivery infrastructure to receive US crude oil has the largest total expenditures and results in the largest increases in capacity to use more volumes of light crude oil.

Conclusion

“US refining is not a bottleneck to producing and using more very light US crude oil over the next few years. The refining industry continues to substitute US crude oil for volumes previously imported from less stable parts of the world, both supporting energy security and allowing time for policy makers and the public to better understand and debate how best to deal with the changing US energy environment.”

Edited from report by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/refining/08042015/refining-us-petroleum/