PetroleumRefiningOverview

Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
Petroleumproducts
Basicpetroleumeconomics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery
2
Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
Petroleumproducts
Basicpetroleumeconomics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery
3
GrowthofU.S.EnergyConsumption
4
Source:18501949,EnergyPerspectives:APresentationofMajorEnergyandEnergyRelatedData,U.S.DepartmentoftheInterior,
1975;19502000,AnnualEnergyReview2000,Table1.3.
0
20
40
60
80
100
120
1750 1800 1850 1900 1950 2000
E
n
e
r
g
y

C
o
n
s
u
m
e
d

(
Q
u
a
d

1
0
1
5

B
T
U
)
Wood
HydroelectricPower
NuclearElectricPower
Coal
NaturalGas
Petroleum
EnergyMarketsAreInterconnected
5
https://publicaffairs.llnl.gov/news/energy/energy.html
PetroleumValueChain
6
http://sparepart.in.th/html/guide.html
U.S.RefiningCapacity
7
EIA,Jan.1,2013database,publishedJune2013
http://www.eia.gov/petroleum/refinerycapacity/
U.S.RefineryCapacityHistoricalTrends
8
Source:http://tonto.eia.doe.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm
SizeDistributionofU.S.Refineries
9
LocationsofU.S.Refineries
10
http://www.eia.gov/todayinenergy/detail.cfm?id=7170
IndividualRefinerySizes 20Largest
11
Complexvs.simplerefinery
12
MajorchangestotheslateofUSrefineries
Motivacompleted$10billionJVexpansionin2013
Increasedto600,000bpdcapacity,nowlargestinUS
Operatingproblemscausednearimmediateshutdownofnewcrudedistillationtrain
Plantoexportrefinedproducts
Refinerieschangingownership&severalshuttingdown
TesoroboughtBPs246,000bpdCarsonrefinery.
$1.175Bforrefinery,$1.3Bforinventory
MarathonPetroleumpurchasedBPs460,000bpdTexasCity.
$589Mforrefinery,$1.4Bforinventory
Tesorosold94,000bpdHawaiirefinerytoParRefining
13
NewGrassRootsRefineriesinU.S.?
LastgrassrootscomplexrefineryinU.S.wasMarathonPetroleumsGaryville,LA,refinery
openedin1976
Twoothercomplexrefineriesopenedinthe1970sarethePhillips66AllianceRefinerynear
NewOrleans,LA,&theBPCherryPointRefineryinnorthwestWashington(1971)
Multiplesimplerefineries
Complexrefineriesinplanningstage
HyperionEnergyCenter,400,000bpdrefinerynearUnionCounty,SD
WillincludePetcoke IGCCforpower&hydrogen
AirpermitwithStateSupremeCourt,rulingexpectedinSeptember2012atearliest
ArizonaCleanFuelsYuma,LLC,150,000bpdrefinerynearYuma,AZ
NopressreleasessinceMarch2009
MHACleanFuelsRefinery,15,000bpsd refineryontheFortBertholdIndianReservationnear
Makoti,ND
ReceivedkeyEPApermitfordischargingtreatedwastewaterAugust2011
DakotaPrairieRefinery
20,000bpdtoppingunitwithdieselhydrotreating
14
U.S.OilfromImports
15
EIApublisheddatausedforcharts
http://www.eia.gov/dnav/pet/pet_move_wkly_dc_nusz00_mbblpd_w.htm
http://www.eia.gov/dnav/pet/pet_pnp_wiup_dcu_nus_w.htm
GenealogyOfMajorU.S.Refiners
16
Ref:http://www.eia.gov/petroleum/refinerycapacity/
GenealogyOfMajorU.S.Refiners
17
Ref:http://www.eia.gov/petroleum/refinerycapacity/
CompanyProfile Phillips66
18
Maps:http://www.phillips66.com/EN/about/ourbusinesses/refiningmarketing/Pages/index.aspx
Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
Petroleumproducts
Basicpetroleumeconomics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery
19
PetroleumProducts
Therearespecificationsfor
over2,000individualrefinery
products
Intermediatefeedstockscan
beroutedtovariousunitsto
producedifferentblendstocks
Dependsuponthelocal
economics&contractual
limitations
20
Ref:Unknownorigin.PossiblySoconyVacuumOilCompany,Inc.(1943)
U.S.Refinery&BlenderNetProduction
21
IncludesproductiontoMay2013
Source:http://tonto.eia.doe.gov/dnav/pet/pet_pnp_refp_dc_nus_mbbl_m.htm
U.S.Refinery&BlenderNetProduction
22
EIA,refineryyield
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm
1.53ratioof
gasoline&naphtha
tomiddledistillates
Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
Petroleumproducts
Basicpetroleumeconomics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery
23
Crude&ProductPrices
24
http://www.bloomberg.com/energy/
RefineryEconomics
Whendorefinersmakemoney?
Highcrudeoilprices?
Lowcrudeoilprices?
Itdepends!
Differencebetweenthesalepriceoftheproducts&purchasepriceofthecrudeoil
Operatingcostscutintothismargin
Typicalprices
Whatisthepriceofcrudeoil?
Dependsonlocation,quality,
Whataretheproductprices?
25
PricesAreCrudeSpecific
26
Ref:Statistics,Oil&GasJournal,June3,2013
PricesAreCrudeSpecific
East of the Rockies Price Change Gvty Adj
Altamont Yellow Wax 81.31 -0.20 B
Bonito Sour (Onshore) 112.75 -0.25 A
Deepwater Sour (Onshore) (30) 109.50 0.00 F,G
East Texas 93.00 -0.25 none
Eugene Island Sour (Onshore) 113.50 0.00 A
Heavy Louisiana Sweet (Onshore) 116.75 -0.25 A
Light Louisiana Sweet (Onshore) 116.00 -0.25 A
New Mexico Intermediate 93.25 -0.25 none
New Mexico Sour (34) 90.25 -0.25 none
North Texas Sweet 93.25 -0.25 none
Oklahoma Sour 90.25 -0.25 none
Oklahoma Sweet 93.25 -0.25 none
Rocky Mountain Condensate 81.06 -0.20 H
South Texas Light Sweet 91.25 -0.25 none
Southwest Wyoming Sweet 86.31 -0.20 E
Uinta Basin Black Wax 80.31 -0.20 B
West Texas Intermediate 93.25 -0.25 none
West Texas Sour (34) 90.25 -0.25 none
Western Colorado 82.06 -0.20 B
27
ScaleA:
Deduct$0.02/bblforeachwholedegreeAPIfrom40.9 to
35.0API.
Deduct$0.015/bblforeach.1degreeAPIbelow35.0API.
Deduct$0.015/bblforeach.1degreeAPIabove45.0API.
ScaleB:
Deduct$0.015/bblforeach.1degreeAPIbelow40.0API.
Deduct$0.015/bblforeach.1degreeAPIabove45.0API.
ScaleF:
Deduct$0.015/bblforeach.1degreeAPIbelow30.0API
Add$0.015/bblforeach.1degreeAPIabove30.0 to35.0API
Add$0.02/bblforeachwholedegreeAPIfrom36 to40.0API.
Deduct$0.015/bblforeach.1degreeAPIabove45.0API.
ScaleG:
Add$0.1/bblforeach.1weightpercentSulfur(wt%S)below2.0
to1.0wt%S
Deduct$0.1/bblforeach.1weightpercentSulfur(wt%S)above
2.0wt%S
ScaleH:
Add$0.015/bblpremiumforeach0.1degreebelow45.0degrees
Deduct$0.05/bblforeach0.1degreeabove60.0degrees
ChevronCrudeOilMarketing
EastoftheRockies Bulletin12E88
May9,2012
http://crudemarketing.chevron.com/posted_pricing_daily.asp
PricesAreCrudeSpecific
PricesAreCrudeSpecific
PricesAreAlsoLocationSpecific
30
Ref:Valero,UBSGlobalOilandGasConference,May2122,2013
ProductEconomics CrackSpread
Estimatesthevalueaddedbyrefiningasanindustry
4standardspreads
532
5bbl crude 3bbls gasoline+2bbls heatingoil/diesel
321
3bbl crude 2bbls gasoline+1bbls heatingoil/diesel
211
2bbl crude 1bbls gasoline+1bbls heatingoil/diesel
6321
6bbl crude 3bbls gasoline+2bbls heatingoil/diesel+1bbl residualfueloil
Ruleofthumbforprofitableoperatingenvironment
Longheldview greaterthan$4perbbl asstronglyprofitable
Currentview shouldbegreaterthan$9perbbl tobeprofitable
31
CrackSpread
Example Bloomberg,8/12/2013
Prices
WTICushingSpot $105.46perbbl
Brent $107.94perbbl
RBOBGasoline $2.8925pergal
HeatingOil $2.9967pergal
532Spreads
WTI
Brent
32

42 3 2.8925 2 2.9967 5 105.49

$17.78perbbl
5

42 3 2.8925 2 2.9967 5 107.94

$15.30perbbl
5
HistoricalCrudePrices&CrackSpreads
33
Source:http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm
HistoricalCrudePrices&CrackSpreads
34
Source:http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm
HowMuchDoRefinersMakeFromGasoline&Diesel?
35
PerGallon PerBarrel
RetailPrice $3.62 $152.04
Taxes 12% $0.43 $18.24
Distribution&Marketing 8% $0.29 $12.16
Refining 14% $0.51 $21.29
CrudeOil 67% $2.43 $101.87
RefineryCosts $2.93 $123.15
GasolineRetailCostContributions
Source:http://www.eia.gov/petroleum/gasdiesel/
PerGallon PerBarrel
RetailPrice $3.87 $162.54
Taxes 13% $0.50 $21.13
Distribution&Marketing 16% $0.62 $26.01
Refining 9% $0.35 $14.63
CrudeOil 62% $2.40 $100.77
RefineryCosts $2.75 $115.40
DieselRetailCostContributions
PumppricesarenotthesameacrossU.S.
36
Source:http://www.eia.gov/petroleum/images/gasoline_prices_map_375.png
Howdoenergypricescompare?
37
Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
Petroleumproducts
Basicpetroleumeconomics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery
38
EarlyHistory
Firstoilwellof"Colonel"EdwinL.Drake
August1859,OilCreekinnorthwesternPennsylvania
FirstrefineriesbuiltuparoundPennsylvaniaoilwells.
Batchdistillationtorecoverkerosene.
Keroseneviewedasasuperiorreplacementtowhaleoil
forlampoil.
StandardOilTrust
JohnD.Rockefelleracquiredpetroleum
interestsduringthelate1800s.
OrganizedastheStandardOilTrust
in1882.
U.S.SupremeCourtdissolvedin1911.
34companiesspunoff.
Changeinproductdemand
In1911,nation'skeroseneoutput
eclipsedforthe1sttimebyadiscarded
byproduct gasoline
39
ImplementationofTechnologies
40
Year Processname Purpose Byproducts,etc.
1862 Atmosphericdistillation Producekerosene Naphtha,tar,etc.
1870 Vacuumdistillation
Lubricants(original)
Crackingfeedstocks(1930's)
Asphalt,residual
cokerfeedstocks
1913 Thermalcracking Increasegasoline Residual,bunkerfuel
1916 Sweetening Reducesulfur&odor Sulfur
1930 Thermalreforming Improveoctanenumber Residual
1932 Hydrogenation Removesulfur Sulfur
1932 Coking Producegasolinebasestocks Coke
1933 Solventextraction Improvelubricantviscosityindex Aromatics
1935 Solventdewaxing Improvepourpoint Waxes
1935 Cat.polymerization
Improvegasolineyield
&octanenumber
Petrochemical
feedstocks
1937 Catalyticcracking Higheroctanegasoline
Petrochemical
feedstocks
1939 Visbreaking Reduceviscosity Increaseddistillate,tar
1940 Alkylation Increasegasolineoctane&yield Highoctaneaviationgasoline
1940 Isomerization Producealkylationfeedstock Naphtha
1942 Fluidcatalyticcracking Increasegasolineyield&octane Petrochemicalfeedstocks
1950 Deasphalting Increasecrackingfeedstock Asphalt
1952 Catalyticreforming Convertlowqualitynaphtha Aromatics
1954 Hydrodesulfurization Removesulfur Sulfur
1956 Inhibitorsweetening Removemercaptan Disulfides
1957 Catalyticisomerization
Converttomoleculeswithhigh
octanenumber
Alkylationfeedstocks
1960 Hydrocracking Improvequalityandreducesulfur Alkylationfeedstocks
1974 Catalyticdewaxing Improvepourpoint Wax
1975 Residualhydrocracking
Increasegasolineyieldfrom
residual
Heavyresiduals
Ref:http://www.osha.gov/dts/osta/otm/otm_iv/otm_iv_2.html
DescriptionofPetroleumRefinery
Manageshydrocarbonmolecules
Organized&coordinatedarrangementofmanufacturingprocesses
Providephysical&chemicalchangeofcrudeoil
Salableproductswithspecifications&volumesasdemandedbythemarketplace
Completerefinerywillinclude:
Tankageforstorage
Dependablesourceforelectricpower
Wastedisposal&treatmentfacilities
Productblendingfacilities
Aroundtheclockoperations
Conversionunits
41
PetroleumRefineryBlockFlowDiagram
Refinery
Processes
Raw
Materials
Products
42
PetroleumRefineryBlockFlowDiagram
43
PetroleumRefineryBlockFlowDiagram
44
PetroleumRefineryBlockFlowDiagram
Light Naphtha
Crude
Oil
Desalter
Atmos-
pheric
Distillation
Vacuum
Distillation
Gas
Separation
&
Stabilizer
Solvent
Deasphal-
ting
Coking
Visbreak-
ing
Fluidized
Catalytic
Cracking
Hydro-
cracking
Naphtha
Reform-
ing
Isom-
erization
Sat Gas
Plant
Polymer-
ization
Alkyla-
tion
Naphtha
Hydro-
treating
Treating &
Blending
Coke
Fuel Gas
LPG
Aviation
Gasoline
Automotive
Gasoline
Solvents
J et Fuels
Kerosene
Solvents
Heating Oils
Diesel
Residual
Fuel Oils
Lubricant
Greases
Waxes
Asphalts
Heavy
Naphtha
Kerosene
Distillate
AGO
LVGO
HVGO
Vacuum
Residuum
Cat
Distillates
Gas Oil
Hydro-
treating
DAO
Isomerate
Gas
Alkyl
Feed
Alkylate
Polymerization
Naphtha
Gases
Butanes
LPG
Reformate
Naphtha
Fuel Oil
Bottoms
Distillates
Distillate
Hydro-
treating
Cat
Naphtha
Cycle Oils
SDA
Bottoms
Coker
Naphtha
Heavy
Coker
Gas
Oil
Light Coker
Gas Oil
Sulfur
Plant
Sulfur
Naphtha
Fuel Oil
Solvent
Dewax-
ing
Lube Oil
Waxes
45
PetroleumRefineryBlockFlowDiagram
Desalter
Atmos-
pheric
Distillation
Vacuum
Distillation
Gas
Separation
&
Stabilizer
Solvent
Deasphal-
ting
Coking
Visbreak-
ing
Fluidized
Catalytic
Cracking
Hydro-
cracking
Naphtha
Reform-
ing
Isom-
erization
Sat Gas
Plant
Polymer-
ization
Alkyla-
tion
Naphtha
Hydro-
treating
Treating &
Blending
Gas Oil
Hydro-
treating
Distillate
Hydro-
treating
Sulfur
Plant
Solvent
Dewax-
ing
46
Separation
distillationor
extraction
Upgradeto
makebetter
gasolineblend
stocks
Removeundesirable
components(e.g.,
sulfur) reactwith
hydrogen
Blendingto
meetfinal
productspecs
Breakapartbig
moleculesinto
smaller
molecules
Topics
Energyconsumption&petroleumsplace
SizeofU.S.industry
Majorrefiners
Petroleumproducts
Basicpetroleumeconomics
Trendsforcrudeoil&gasolineprices
Whendorefinersmakemoney?
GeneralizedPetroleumRefinery
47