8 ms·

So if I understand correctly, US refineries are built to process imported oil, rather than the domestic oil drilled out of US land. Which means that if the US s

So if I understand correctly, US refineries are built to process imported oil, rather than the domestic oil drilled out of US land. Which means that if the US stops importing, it will not have a way to meet domestic consumption demand without building new refineries, or making (presumably) substantial modifications to existing processing infrastructure. What’s the lead time and cost to build that out?

bena 5y ago
Regardless, this does seem like a situation where the best time to start that was yesterday and the second best time is today.
thematt 5y ago
It's not just a matter of building more refineries to process it. The different API Gravities of the oil are used to output different products. Gasoline, jet fuel, etc. So yes, you could modify refineries (at significant expense) to process different grades of crude, but in order to target different outputs we still need to import the different grades of oil because the refineries end up mixing/matching to get the levels they need. The US produces a lot of light oil, but less of the medium/heavy grades you'll find in Canada or the Middle East.
- myself248 5y ago
  You seem to be the first to mention, something that I think is of supreme interest: How adaptable are the refineries? All oil must have variations in its properties, and every refinery must be able to cope with a certain amount of variation. If you have a refinery that's built for heavy sour oil, how much lighter and sweeter can it handle without any modifications at all? And how much time and money does it take to broaden its range further? What are the heavier grades used for, I'd imagine stuff like bunker fuel and asphalt? If the prices of those end products went up, wouldn't the market adapt to a certain degree, say using more concrete and less asphalt, etc?
  - thematt 5y ago
    Lighter oils get used for gasoline, diesel, and aviation fuels. Heavy oils get used for plastics, petrochemicals, and road surfacing. I wish there was an easy answer to your refinery question. They're all different, but there are three basic types of refineries: The simplest is a topping plant, which is basically just a distillation unit. The output you get is basically whatever the natural yield of the oil is. These refineries can typically only process light crudes. The next level refinery is a cracking refinery. These take the gas oil output from the distillation and breaks it down further using high temperature, pressure, and catalysts. This allows for the breakdown of slightly heavier crudes. The final level is a coking refinery. This takes all the residual fuel and "cracks" it into a lighter product. This increases the yield of higher value gasoline, which allows a refinery to take in cheaper heavier crudes. Building a new refinery is a 5+ year process that costs about $7-10 billion. I'm not sure what upgrading an existing one costs, but it's somewhere in that ballpark. Keep in mind that a large influence on the type of refinery is their geographic location. They're built to accept the type of oil that flows in the pipelines.
    - Symbiote 5y ago
      Would they also be built to produce the type of products needed by the local-ish market? So one in Europe will have a higher fraction of diesel (used in most trucks, some cars, and some trains) compared to the USA (trucks and almost all cars use petrol). (Compare: https://www.statista.com/statistics/189410/us-gasoline-and-diesel-consumption-for-highway-vehicles-since-1992/ https://www.statista.com/statistics/189410/us-gasoline-and-d... - https://www.racfoundation.org/data/volume-petrol-diesel-consumed-uk-over-time-by-year https://www.racfoundation.org/data/volume-petrol-diesel-cons... -- the ratio is very roughly reversed.)
      - thematt 5y ago
        Yes, to a certain extent. But refined products get piped all over, so it isn't a very tight coupling. Delta Airlines bought their own refinery for jet fuel. It didn't work out too well, but it was still interesting. https://www.nytimes.com/2020/08/10/business/energy-environment/delta-oil-refinery-jet-fuel.html https://www.nytimes.com/2020/08/10/business/energy-environme...
zubiaur 5y ago
A new major refinery? Give or take, a decade. From planning, basic engineering, to permitting, detailed engineering and construction. The fastest, easiest way to solve the issue is to blend our light crude with heavy crude to have something usable in our refineries. The cheapest, fastest and safest way to move oil is through a pipeline. The most geopolitically stable supplier of heavy and super heavy crude oil is just north of our border. Canada. The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked. The con of Canadian oil is that some of it is produced by Steam Assisted Gravity Drain, a process were steam has to be injected into the reservoir to heat up and reduce the heavy oil’s viscosity, allowing it to drain into a horizontal well, drilled closely below the steam injecting well. This is an energy intensive process, and if the energy to produce the steam is derived from fossil fuels, it’s carbon footprint is large. Another potential suppliers of heavy crude is Venezuela, but it’s dictatorship has mismanaged the industry to the point that they are importing crude and distillates. There are no solutions, only trade offs.
- nradov 5y ago
  If we get really desperate, expanded drilling off the coast of California along with building another refinery near Santa Barbara could also be part of the solution. Of course many of us in California would oppose this, for understandable reasons.
- giantrobot 5y ago
  > The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked. The Keystone XL pipeline was meant to take Canadian oil to the Gulf of Mexico to refineries intending to export it. Very little of the refinery infrastructure at the terminal end of the pipeline was equipped to redistribute it domestically. Something like 70% of the oil transported by Keystone XL would have been for export.
  - Teever 5y ago
    Also as a Canadian I'm a little baffled why we should be prioritizing building pipelines that run north to south to export our oil when we can run pipelines east to west to supply our own people and export on our own shores.
nradov 5y ago
It's nearly impossible to build or expand refineries in the US anymore due to environmental laws, real estate costs, and local opposition. And I can't really blame the NIMBYs: living next to a refinery sucks due to the air pollution, and risk of spills or fires.
deleted 5y ago
[deleted]
peter303 5y ago
Refineries are like nuclear plants- no new ones in almost a half century (1976), but significant upgrades of existing ones. Both due to environmental regulations and cost.

bena 5y ago

Regardless, this does seem like a situation where the best time to start that was yesterday and the second best time is today.

thematt 5y ago

It's not just a matter of building more refineries to process it. The different API Gravities of the oil are used to output different products. Gasoline, jet fuel, etc. So yes, you could modify refineries (at significant expense) to process different grades of crude, but in order to target different outputs we still need to import the different grades of oil because the refineries end up mixing/matching to get the levels they need. The US produces a lot of light oil, but less of the medium/heavy grades you'll find in Canada or the Middle East.

myself248 5y ago
You seem to be the first to mention, something that I think is of supreme interest: How adaptable are the refineries? All oil must have variations in its properties, and every refinery must be able to cope with a certain amount of variation. If you have a refinery that's built for heavy sour oil, how much lighter and sweeter can it handle without any modifications at all? And how much time and money does it take to broaden its range further? What are the heavier grades used for, I'd imagine stuff like bunker fuel and asphalt? If the prices of those end products went up, wouldn't the market adapt to a certain degree, say using more concrete and less asphalt, etc?
- thematt 5y ago
  Lighter oils get used for gasoline, diesel, and aviation fuels. Heavy oils get used for plastics, petrochemicals, and road surfacing. I wish there was an easy answer to your refinery question. They're all different, but there are three basic types of refineries: The simplest is a topping plant, which is basically just a distillation unit. The output you get is basically whatever the natural yield of the oil is. These refineries can typically only process light crudes. The next level refinery is a cracking refinery. These take the gas oil output from the distillation and breaks it down further using high temperature, pressure, and catalysts. This allows for the breakdown of slightly heavier crudes. The final level is a coking refinery. This takes all the residual fuel and "cracks" it into a lighter product. This increases the yield of higher value gasoline, which allows a refinery to take in cheaper heavier crudes. Building a new refinery is a 5+ year process that costs about $7-10 billion. I'm not sure what upgrading an existing one costs, but it's somewhere in that ballpark. Keep in mind that a large influence on the type of refinery is their geographic location. They're built to accept the type of oil that flows in the pipelines.
  - Symbiote 5y ago
    Would they also be built to produce the type of products needed by the local-ish market? So one in Europe will have a higher fraction of diesel (used in most trucks, some cars, and some trains) compared to the USA (trucks and almost all cars use petrol). (Compare: https://www.statista.com/statistics/189410/us-gasoline-and-diesel-consumption-for-highway-vehicles-since-1992/ https://www.statista.com/statistics/189410/us-gasoline-and-d... - https://www.racfoundation.org/data/volume-petrol-diesel-consumed-uk-over-time-by-year https://www.racfoundation.org/data/volume-petrol-diesel-cons... -- the ratio is very roughly reversed.)
    - thematt 5y ago
      Yes, to a certain extent. But refined products get piped all over, so it isn't a very tight coupling. Delta Airlines bought their own refinery for jet fuel. It didn't work out too well, but it was still interesting. https://www.nytimes.com/2020/08/10/business/energy-environment/delta-oil-refinery-jet-fuel.html https://www.nytimes.com/2020/08/10/business/energy-environme...

zubiaur 5y ago

A new major refinery? Give or take, a decade. From planning, basic engineering, to permitting, detailed engineering and construction. The fastest, easiest way to solve the issue is to blend our light crude with heavy crude to have something usable in our refineries. The cheapest, fastest and safest way to move oil is through a pipeline. The most geopolitically stable supplier of heavy and super heavy crude oil is just north of our border. Canada. The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked. The con of Canadian oil is that some of it is produced by Steam Assisted Gravity Drain, a process were steam has to be injected into the reservoir to heat up and reduce the heavy oil’s viscosity, allowing it to drain into a horizontal well, drilled closely below the steam injecting well. This is an energy intensive process, and if the energy to produce the steam is derived from fossil fuels, it’s carbon footprint is large. Another potential suppliers of heavy crude is Venezuela, but it’s dictatorship has mismanaged the industry to the point that they are importing crude and distillates. There are no solutions, only trade offs.

nradov 5y ago
If we get really desperate, expanded drilling off the coast of California along with building another refinery near Santa Barbara could also be part of the solution. Of course many of us in California would oppose this, for understandable reasons.
giantrobot 5y ago
> The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked. The Keystone XL pipeline was meant to take Canadian oil to the Gulf of Mexico to refineries intending to export it. Very little of the refinery infrastructure at the terminal end of the pipeline was equipped to redistribute it domestically. Something like 70% of the oil transported by Keystone XL would have been for export.
- Teever 5y ago
  Also as a Canadian I'm a little baffled why we should be prioritizing building pipelines that run north to south to export our oil when we can run pipelines east to west to supply our own people and export on our own shores.

nradov 5y ago

It's nearly impossible to build or expand refineries in the US anymore due to environmental laws, real estate costs, and local opposition. And I can't really blame the NIMBYs: living next to a refinery sucks due to the air pollution, and risk of spills or fires.

deleted 5y ago

[deleted]

peter303 5y ago

Refineries are like nuclear plants- no new ones in almost a half century (1976), but significant upgrades of existing ones. Both due to environmental regulations and cost.