5 ms·

That doesn't mean that they need to be, long term. When the turnaround comes to replace some of those oversized heavy-processing vessels, the preference (in an

That doesn't mean that they need to be, long term. When the turnaround comes to replace some of those oversized heavy-processing vessels, the preference (in an deregulated market) would be not to replace them. If epa and other regs that dictate output quotas loosen, it'd been easy for preference to change.

whatever1 2y ago
Nobody is building refineries today. Gasoline demand is shrinking every year. All of them are rusty and they will just be driven to the ground with minimal maintenance.
- AtlasBarfed 2y ago
  I keep wondering if a financial death spiral will hit petroleum. Who wants to do long term loans and investment in something where PV/Wind/Storage/EVs are evolving rapidly? Petroleum is based on huge amounts of hidden subsidies as well, which might unwind rapidly (in the five year sense). Example: The US Navy is basically an unfunded subsidy for worldwide shipping. Oil in theory relies on a threshold of political power to keep carbon taxes at bay, or worse, a huge "they knew" lawsuit/penalty which is increasingly tenuous every year. But I haven't heard or seen it, but I'm no insider.
  - whatever1 2y ago
    There is a lower bound of production needed and that is to cover chemicals, bunker fuel for ships and jet fuel for airplanes. I don’t see these demand factors going away anytime soon (unless ships start converting to nuclear and some density breakthrough happens to batteries that will allow electric airplanes to exist)
    - AtlasBarfed 2y ago
      But that is how many scales of production lower than current production? Keep in mind that all the cheap, easy, light, sweet crude that is just a couple feet below the ground is LONG gone. So every oil development is a ... BIG ... industrial project. Tar sands, fracking, shale oil, deep sea drilling, mega mega mega tankers. First of all, that implies a larger amount of upfront investment. No deep sea oil until you build the huge drilling platform. But if the return on investment drops sufficiently (or risk profile, etc), then the projects don't start. So the supply starts to tail off. So refineries don't need to be as big. But... they are ALREADY that big, so the maintenance is a semi-fixed cost. So the costs go up. The financing get riskier. Can you see the spiral I refer to? The oil industry has developed with a certain degree of demand and demand growth to continue its expansion, as extraction has become more difficult. Now, I think based on my VERY limited research that the shale oil in the dakotas has a certain floor, and production will continue for decades. But other parts of the world may not have such guarantees, especially if the old US Navy decides to stop securing everyone's oil (insert the cheeto talking about everyone freeloading off the USA).
      - whatever1 2y ago
        This spiral is already happening, most of the players who do not have valuable upstream assets (oilfields) started diversifying their portfolio with biofuels, renewables, electric charging infrastructure etc (see Shell, BP). Other luckier folks have a ton of cash and a ton of valuable assets in their upstream portfolio. These guys only need limited financing, and they have decided to position themselves as the companies who will extract and sell the last barrell of oil (see ExxonMobil, Chevron etc). Your intuition is right, but there will be no disruption. The consolidation will ensure that the remainder players have the capacity to keep the music on (of course at a higher product price).
- beerandt 2y ago
  Someone doesn't know what turnaround means. Every refinery shuts down at least twice a year for a multi-week turnaround. The minimum cost to stay operating isn't paying to keep the high cost vessels running, but to remove and sell them to a place that has that heavy crude locally. The heavy oil processing is the larger maintenence cost that you think isn't happening.
John23832 2y ago
Nobody wants to build refineries. There is a reason why they call that portion of Texas and Louisiana the cancer coast.
- 486sx33 2y ago
  I think you mean “cancer alley”
  - beerandt 2y ago
    Which was debunked as being the same map you see everywhere else making bs claims about the south. The clusters are poor and poor health, but have no statistical significance to pollution levels.
    - John23832 2y ago
      > The clusters are poor and poor health, but have no statistical significance to pollution levels Yeah, because the rich don’t want a refinery in their nice neighborhood. The second order effect being that the cancer is exported to wherever the refinery lands. https://www.epa.gov/sites/default/files/2019-12/documents/waiting_to_die_final.pdf https://www.epa.gov/sites/default/files/2019-12/documents/wa... Get it while it’s hot.
- beerandt 2y ago
  The heavy crude processing is a maintenance cost sink. Reverting to processing local oil is both cheaper equipment wise (removing the heavy crude vessels and selling them) and cheaper bc you don't pay to pipe oil with the viscosity of sludge across the continent. Fed quotas are the reason for the current config, configuration, economics.

whatever1 2y ago

Nobody is building refineries today. Gasoline demand is shrinking every year. All of them are rusty and they will just be driven to the ground with minimal maintenance.

AtlasBarfed 2y ago
I keep wondering if a financial death spiral will hit petroleum. Who wants to do long term loans and investment in something where PV/Wind/Storage/EVs are evolving rapidly? Petroleum is based on huge amounts of hidden subsidies as well, which might unwind rapidly (in the five year sense). Example: The US Navy is basically an unfunded subsidy for worldwide shipping. Oil in theory relies on a threshold of political power to keep carbon taxes at bay, or worse, a huge "they knew" lawsuit/penalty which is increasingly tenuous every year. But I haven't heard or seen it, but I'm no insider.
- whatever1 2y ago
  There is a lower bound of production needed and that is to cover chemicals, bunker fuel for ships and jet fuel for airplanes. I don’t see these demand factors going away anytime soon (unless ships start converting to nuclear and some density breakthrough happens to batteries that will allow electric airplanes to exist)
  - AtlasBarfed 2y ago
    But that is how many scales of production lower than current production? Keep in mind that all the cheap, easy, light, sweet crude that is just a couple feet below the ground is LONG gone. So every oil development is a ... BIG ... industrial project. Tar sands, fracking, shale oil, deep sea drilling, mega mega mega tankers. First of all, that implies a larger amount of upfront investment. No deep sea oil until you build the huge drilling platform. But if the return on investment drops sufficiently (or risk profile, etc), then the projects don't start. So the supply starts to tail off. So refineries don't need to be as big. But... they are ALREADY that big, so the maintenance is a semi-fixed cost. So the costs go up. The financing get riskier. Can you see the spiral I refer to? The oil industry has developed with a certain degree of demand and demand growth to continue its expansion, as extraction has become more difficult. Now, I think based on my VERY limited research that the shale oil in the dakotas has a certain floor, and production will continue for decades. But other parts of the world may not have such guarantees, especially if the old US Navy decides to stop securing everyone's oil (insert the cheeto talking about everyone freeloading off the USA).
    - whatever1 2y ago
      This spiral is already happening, most of the players who do not have valuable upstream assets (oilfields) started diversifying their portfolio with biofuels, renewables, electric charging infrastructure etc (see Shell, BP). Other luckier folks have a ton of cash and a ton of valuable assets in their upstream portfolio. These guys only need limited financing, and they have decided to position themselves as the companies who will extract and sell the last barrell of oil (see ExxonMobil, Chevron etc). Your intuition is right, but there will be no disruption. The consolidation will ensure that the remainder players have the capacity to keep the music on (of course at a higher product price).
beerandt 2y ago
Someone doesn't know what turnaround means. Every refinery shuts down at least twice a year for a multi-week turnaround. The minimum cost to stay operating isn't paying to keep the high cost vessels running, but to remove and sell them to a place that has that heavy crude locally. The heavy oil processing is the larger maintenence cost that you think isn't happening.

John23832 2y ago

Nobody wants to build refineries. There is a reason why they call that portion of Texas and Louisiana the cancer coast.

486sx33 2y ago
I think you mean “cancer alley”
- beerandt 2y ago
  Which was debunked as being the same map you see everywhere else making bs claims about the south. The clusters are poor and poor health, but have no statistical significance to pollution levels.
  - John23832 2y ago
    > The clusters are poor and poor health, but have no statistical significance to pollution levels Yeah, because the rich don’t want a refinery in their nice neighborhood. The second order effect being that the cancer is exported to wherever the refinery lands. https://www.epa.gov/sites/default/files/2019-12/documents/waiting_to_die_final.pdf https://www.epa.gov/sites/default/files/2019-12/documents/wa... Get it while it’s hot.
beerandt 2y ago
The heavy crude processing is a maintenance cost sink. Reverting to processing local oil is both cheaper equipment wise (removing the heavy crude vessels and selling them) and cheaper bc you don't pay to pipe oil with the viscosity of sludge across the continent. Fed quotas are the reason for the current config, configuration, economics.