Sunday, November 07, 2004

First the crude facts, now the refinery facts

I had asked an expert about refineries in the U.S. here are his answers.............
Here is my fist posting on fuel prices that you may want to read first.

The cost factor in building any new refinery today comes mainly from environmental issues. The cost of building a refinery that will meet the ever changing (and needed) environmental restrictions can be very expensive indeed. the only refinery that I personally know of that can process "Sour" crude is the ChevronTexaco plant in Pascagoula Mississippi. The process to remove the excess of Sulfur and heavy metals that makes "Sour" crude "Sour" takes a special process. To upgrade current refineries to accommodate this process would probably be even more expensive than actually setting up a complete new refinery.
This excerpt from the ChevronTexaco site may give you an idea of the process.
"Because about 80 percent of the crude oil processed by the Pascagoula Refinery is heavier oils that are high in sulfur and metals, our complex Residuum Desulfurization (RDS) Unit is an important part of our operations. In the RDS Unit's six 1,000-ton reactors, sulfur and nitrogen and metals are removed from FCC feed and the residuum,( a thick tarlike substance that is found at the very bottom of the separation towers after product separation) which is the heaviest oil that comes from the vacuum distillation at the Crude Units. The sulfur is converted to hydrogen sulfide and sent to the Sulfur Unit where it is converted into elemental sulfur. The metals attach to the reactor's catalyst and are eventually recovered. Nitrogen is transformed into ammonia which is removed from the process by water-washing. Later, the water is treated to recover the ammonia as a pure product for use in the production of fertilizer."
Regarding the second part of your question, I don't have the exact percentage available. However It has been said that to manufacture an average home computer system, it takes about 1 1/2 gallons of crude oil.
Hope this helps.


William "Hawk" Howes ILS Answers -

Regarding last refinery built,
"No new refineries have been built in the US in the past 25 years. And petroleum industry experts say anyone would have to be crazy to launch such an effort -- even though present refineries are running at nearly 100 % of capacity and local gasoline shortages are beginning to crop up.

Why does the industry appear to have built its last refinery?
Three reasons: Refineries are not particularly profitable, environmentalists fight planning and construction every step of the way and government red-tape makes the task all but impossible. The last refinery built in the US was in Garyville, Louisiana, and it started up in 1976.
Energy proposed building a refinery near Portsmouth, Virginia, in the late 1970s, environmental groups and local residents fought the plan -- and it took almost nine years of battles in court and before federal and state regulators before the company cancelled the project in 1984.

Industry officials estimate the cost of building a new refinery at between $ 2 bn and $ 4 bn -- at a time the industry must devote close to $ 20 bn over the next decade to reducing the sulphur content in gasoline and other fuels -- and approval could mean having to collect up to 800 different permits. As if those hurdles weren't enough, the industry's long-term rate of return on capital is just 5 % -- less than could be realized by simply buying US Treasury bonds.
"I'm sure that at some point in the last 20 years someone has considered building a new refinery," says James Halloran, an energy analyst with National City Corp. "But they quickly came to their senses," he adds."

Source: Investor's Business Daily

And after all that, The rumor is a new refinery is being built in Arizona! If I get any further info on that one I'll let you know.


Have any other questions? Try one of our experts at

Also, there are over 200,000 miles of liquid carrying pipe in the U.S. that need maintenance, repairs, and uprating continuously.

A commenter said that Houston was able to refine sour crude till the EPA banned it

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