Hmmm.....I wonder if any bright corporate guy is thinking about the possibility of building a refinery in ND?? Seems like that might make economic sense, given the proximity to the large urban areas of the Midwest.
There is a lot more to economics of refiner than nearby crude oil. Refineries have to have the product pipelines coming out of them as well as crude and natural gas going into them.
They also produce more products than just transportation fuels. Residual Oil, Petroleum Coke, Sulfur, Chemical feedstocks, etc all need to move to their market place. Most of those are in the Gulf Coast area or transported to overseas markets. Today we have a surplus of refinery capacity. The economics of building a new one likely mean closing down another that already has the infrastructure in place. In the Houston area for example is also a hydrogen pipeline delivering to many refineries for a better price than they can build their own hydrogen generators. Modern refineries use a lot of hydrogen in their processing.
These are the reasons there is about a 40% pricing advantage to expanding an existing refinery over building a new one. Some exception exist but that is a typical pricing differences. Also building in an area that sees temperatures down to -50°F creates additional expenses.
There is a lot more to economics of refiner than nearby crude oil. Refineries have to have the product pipelines coming out of them as well as crude and natural gas going into them.
They also produce more products than just transportation fuels. Residual Oil, Petroleum Coke, Sulfur, Chemical feedstocks, etc all need to move to their market place. Most of those are in the Gulf Coast area or transported to overseas markets. Today we have a surplus of refinery capacity. The economics of building a new one likely mean closing down another that already has the infrastructure in place. In the Houston area for example is also a hydrogen pipeline delivering to many refineries for a better price than they can build their own hydrogen generators. Modern refineries use a lot of hydrogen in their processing.
These are the reasons there is about a 40% pricing advantage to expanding an existing refinery over building a new one. Some exception exist but that is a typical pricing differences. Also building in an area that sees temperatures down to -50°F creates additional expenses.