Engineering News

U.S. oil refineries do record business
uly 24, 2014 4:23 pm

As U.S. oil production surges, America’s refineries are doing record business.

By boosting capacity in the Midwest and Gulf Coast, they’re now processing more barrels of crude oil than at any time since weekly records began in 1990, according to data this week from the U.S. Energy Information Administration.

U.S. refineries processed 16.8 million barrels per day for the weeks ending July 11 and July 18, eclipsing the prior record set in the summer of 2005. The amount is up 2% from a year ago and 5% from two years ago.

“There’s more capacity and higher utilization rates. They are among the reasons we’re seeing record processing of crude oil,” says EIA spokesman Jonathan Cogan, also noting the push to expand exports and meet growing domestic demand.

Although the number of operating U.S. refineries has fallen from 254 in 1982 to 139 last year, EIA data show their combined capacity has increased during that time — from 16.1 million barrels per day to 17.7 million.

Changes may be most significant in the Midwest, where capacity rose 7.9% in April from a year ago. The region’s refineries have access to cheaper oil, because it’s physically closer to major oil-producing areas in North Dakota and Canada.

“They have every incentive to run very hard,” says Joanne Shore, chief industry analyst at the American Fuel and Petrochemical Association, noting the economics of processing oil varies widely in the U.S.

The Midwest’s record-high processing of 3.8 million barrels per day in mid-July pushed its refinery utilization beyond 100% for the first time since EIA began collecting such regional data in July 2010.

“We have repositioned our U.S refineries to take advantage of the greater supply of crude oil in the North,” says BP spokesman Scott Dean, noting the company has sold its two southern ones — one in Texas City, Texas and one near Los Angeles — in recent years.

BP, the largest U.S. oil and gas producer, now has just three U.S. refineries, including ones in Cherry Point, Wash., and Toledo, Ohio. In December, it completed a multi-billion dollar upgrade of its Whiting, Ind., facility so it could process heavier crudes such as Canada’s tar sands.

Gulf Coast refineries, which process half of the nation’s crude oil, are also running at near-record levels.

“The United States remains an increasingly active participant in the global petroleum products trade,” the EIA weekly report said.  Last year, the nation set a record for total and net exports of these oil-based products. It now exports far more of them than it imports.

This likely won’t change any time soon.  U.S. oil production is expected to increase next year, ensuring steady supplies for the nation’s refineries. At the same time, Americans are using more gasoline for their vehicles, which has boosted U.S. demand for petroleum products.

“Given the increase in domestic demand, rising exports and expanded refinery capacity,” the EIA report says, “recent record refinery runs may soon be surpassed.”

Source: USA Today

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