We actually import more crude oil than we need and export the surplus products. We usually import gasoline, or gasoline blending products but when you include all the products from the barrel, we are a net exporter.
Posted on 10/01/2014 5:11:33 AM PDT by thackney
...By all logic, we should be working to sustain the boom. We aren’t, and therein lies a classic example of how good policy is held hostage to bad politics and public relations. What would promote continued exploration is a lifting of the current U.S. ban on exporting crude oil. Let producers sell into the world market. But that seems (wrongly) an unjustified giveaway to industry. The public perceptions are atrocious.
Hardly anyone expected the oil boom, with some notable exceptions — prominently Harold Hamm, who pioneered North Dakota’s Bakken field. “Fracking” (the injection of pressurized water into fields to make oil and natural gas flow) and “horizontal drilling” (the use of one pipe along a single oil reservoir) changed everything. Formations of “tight oil” embedded in shale or dense sandstone became economical to produce.
The benefits are huge. Surging U.S. production has created thousands of jobs, helped stabilize global oil markets and curbed our import dependence. From 2008 to 2014, net imports dropped about 50 percent.
Sure, there are concerns: Rail transport of crude oil involves safety issues; there are continuing environmental worries about fracking. Still, public gains outweigh the costs. Indeed, producers’ very success at raising oil output increasingly poses problems.
If you want companies to search for oil, you have to provide them with a viable market where they might profitably sell it. As output has increased, this has become a bigger issue. Here’s why.
The new oil consists mostly of “sweet, light” crudes, meaning they have a low sulfur content and are less dense than “sour, heavy” crudes. The trouble is that many U.S. refineries have been designed to process heavy, sour crudes...
The result is that more and more new oil is chasing less and less usable refining capacity....
(Excerpt) Read more at washingtonpost.com ...
protectionist flaming in three, two, one........go
I’m ready. I wear FRC for going into the plants.
If not fixed, producers will be discouraged by an oil market that seems rigged against them. They will react by slowing — or possibly stopping — new exploration. The oil boom will ebb or end. Global oil supplies will then be lower than they would otherwise be; prices will be higher. It’s a bad outcome for the United States but a good one for Russia, Iran and other producers hostile to us.
Dare I ask why the apparent need for increased refinery capacity is not satisfied?
We actually import more crude oil than we need and export the surplus products. We usually import gasoline, or gasoline blending products but when you include all the products from the barrel, we are a net exporter.
I don't have a dog in this, I don't understand the problem.
Do people think Ford or GM would be stronger, and our domestic economy would be better, if we prohibited them from exporting cars?
This isn't going to happen, for two reasons. First, the article assumes politicians are smart enough to understand the argument. I've seen nothing to suggest this is true. Second, the voting public is even more dumb and have the economic IQ of a gnat. The public does understand high prices, which they don't like, which explains why politicians don't have the stones to make hard decisions. Obozo could easily announce that he would open off shore lands for open bidding, sign an Executive Order for the Keystone pipe line, and announce that market decisions being handed down by the EPA (et al) will, as it should be, have to be approved by Congress after years of abdicating their responsibility and letting bureaucracies run economic policy. This would create an environment that would work to both our short and long run interests.
Refineries operate on a tight margin, most of the cost for the products comes from the cost of the oil.
Consequently, refineries are designed to be as efficient as economically possible. The are designed for specific oils, both gravity (heavy vs light) and sulfur (sweet vs sour).
Trying to process oils outside their design envelope makes them less efficient, costing more energy to produce the same products, while often producing more waste products and consuming more oil for the same desired products.
Many of the US refineries spent billions of dollars in the last couple decades to be able to process the cheaper heavy sour oil that was becoming more common at that time. In the past couple years, the US oil production has jumped, but only in the light sweet oil qualities.
It would be to the US advantage to continue to import the cheaper heavy sour oil were are designed to process, while exporting some surplus light sweet oil.
Dare I ask why the apparent need for increased refinery capacity is not satisfied?
Go ask the NIMBY’s, the Sierra Club, the Eco-nuts, etc. To my knowledge there has not been a single ‘new’ refinery built in the U.S. in over forty years. Pretty much like no new nuke plants, but I digress.
Political not economic perceptions and regulations on top of that have harmed anyone who wants to build such facilities. This will not change unless some ‘huge’ outside factor occurs.
The “newest” refinery in the United States began operating in 2008 in Douglas, Wyoming (tiny).
But we have spent the last few decades expanding and upgrading our refineries. We do not have a refinery shortage. We refine more than we use and export the surplus.
When was the last refinery built in the United States?
http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6
Can't they just fix that in the software? ;-)
Thank you for the correction. Perhaps we’ll see more refinery’s popping up near the oil fields.
Putting the refinery closer to the oil fields just means you have to transport the variety of products farther distances instead of using the existing pipelines.
You can move crude oil to the existing refineries and distribution systems. Otherwise, you have to move gasoline, diesel, kerosene, chemical feedstocks, residual oil, petroleum coke, sulfur, etc from the new refinery location.
We need to flood the world with American oil and gas, which will bankrupt Russia, as well as all the middle east producers, who don’t wish us well.
I remember reading a few years back about a refinery that was supposed to be built near Sioux City/Sioux Falls. The idea was to build a refinery just to process the oil coming out of ND, MT. Enlighten us please.
I’m not sure how much of the refinery was hype and how much was real intent. They keep falling short of plans.
Another roadblock for $10 billion Union County, S.D., oil refinery
http://siouxcityjournal.com/business/local/another-roadblock-for-billion-union-county-s-d-oil-refinery/article_1178828e-a16f-5563-98fb-cf347d75c5ab.html
March 15, 2013
Plans for a proposed $10 billion oil refinery and power plant in rural Union County are back to square one.
Hyperion Refining reluctantly decided Friday not to ask state environmental regulators for more time to start construction on the energy center. Instead, the Dallas firm said it will consider filing a new application for an air permit with the state Department of Environment and Natural Resources.
The existing permit required Hyperion to break ground by Friday.
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Eye on Business: Paperwork filed to release final Hyperion options
http://siouxcityjournal.com/blogs/eye_on_business/eye-on-business-paperwork-filed-to-release-final-hyperion-options/article_a61b187f-3c8e-500b-8d82-9addfcd803c2.html
May 09, 2013
At the end of September, Hyperion Refining stopped making land-purchase option payments to owners of more than 3,000 acres of Union County farmland. The action put the Dallas, Texas-based company’s once-promising plans for a $10 billion oil refinery and power plant on life support.
Some, but not all of the options, were recorded in the Union County Register of Deeds office. After the paychecks ended, some owners waited months for the company to file the necessary paperwork to remove the options.
Releases on the last 24 parcels were filed April 29 and 30, Register of Deeds Jana Fultz said.
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No. 9 story of ‘13: $10B South Dakota refinery derailed
http://siouxcityjournal.com/business/local/no-story-of-b-south-dakota-refinery-derailed/article_eb327ce9-e67d-59cf-a114-e5081f11f78a.html
December 20, 2013
Hyperion continues to explore its options, spokesman Eric Williams said this month.
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The Hyperion Energy web site (http://www.hyperionec.com) linked from the SD Dept of Environment and Natural Resources page (http://denr.sd.gov/hyperion.aspx) appears to be dead.
I used to be very ambivalent about this because in the end I want lower energy prices. But it would not be good to collapse oil prices before the USA is totally oil independent. I figure that will happen about 2019-20. So in the meantime I support keeping oil prices high by allowing oil exports.
What I don’t understand is why the refiners don’t just add new capacity that is adapted to light sweet crude. Its kind of a waste to export crude rather than the finished product.
Some of that is happening. The problem is it takes years to make major changes to refineries for that. And if the export ban doesn't get reduced soon, that supply might start to diminish before they would get their investment paid off.
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