US-Mexico crude oil swaps approved last month by the US Department of Commerce's Bureau of Industry and Security will likely involve exchanges of US light sweet crude for Mexican heavy sour crude that is already being exported to the US. The swaps, which are provided for under longstanding regulations governing US crude oil exports, are expected to be both economically and environmentally beneficial to both parties because of differences in crude oil qualities as well as differences in each country's petroleum refineries. The swaps will allow a greater degree of operational efficiency in both Mexico and the US while allowing for increased supply of lower sulfur gasoline from Mexican refineries.
With significant coking and desulfurisation capacity, US Gulf Coast refineries are well suited to process heavy sour crude, but much of the recent crude oil production gains in the US have been light sweet crudes coming from plays such as Eagle Ford. There are six major refineries in Mexico. Three of them, representing 42% of total capacity, have coking units and can produce lower sulfur gasoline. The other three refineries do not have cokers and related upgrading units. Consequently, they produce only limited amounts of lower sulfur products and are not well configured to process heavy sour crude oil. In 2014, the six refineries processed 1.2 million bpd of crude oil, which included 658 000 bpd of Isthmus, a medium sour crude, and 497 000 bpd of Maya, a heavy sour crude blend.
Although the full effects of crude oil substitution in refineries can be complex, EIA analysed the relative product yields and the sulfur levels of the resulting products for three Mexican crude oils (Maya, Isthmus, and Olmeca) along with the same information for US crude oil and condensate produced from the Eagle Ford formation of southern Texas. Both product yields and the sulfur levels of the distillation products vary among the different crude oils. Notably, while Olmeca has similar product yields to some of the Eagle Ford crude produced in the US, the Eagle Ford crude has lower sulfur content.
The difference in sulfur content is particularly important for the naphtha cut, which is blended or further refined to make motor gasoline. Mexico hopes to achieve a level of 30 ppm for all gasoline nationwide; fuel meeting this sulfur specification is currently available only in major Mexican metropolitan areas or in premium fuel.
The partial substitution of Eagle Ford crude for Mexican crudes (such as Isthmus and Olmeca that are run either straight or blended with heavier Mexican crudes such as Maya) in Mexican refineries would free up sulfur removal capacity in the Mexican refining system. This would, in turn, allow that capacity to be used to produce more lower sulfur gasoline than is currently possible. Any increased supply of lower sulfur gasoline to Mexico's motor gasoline market, which consumed 761 000 bpd in 2013, would result in reduced sulfur emissions and other environmental benefits.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/10092015/eia-crude-swaps-with-mexico-could-be-economically-and-environmentally-beneficial-1382/