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To: Wonder Warthog
.I wonder if any bright corporate guy is thinking about the possibility of building a refinery in ND??

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.

4 posted on 08/13/2012 8:41:54 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
"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."

I'm very well aware of all these factors (I worked in the chem industry in Louisiana for decades, and one of my sisters-in-law works at Exxon). That said, the notion that we have a surplus of refineries is a new one on me. In fact, you're the only person I've ever heard say that. Certainly "a shortage of refineries" and "no refineries have been built in the USA in "X" years" are two of the common statements made by the oil products companies whenever the price of gas goes up.

And I think you have the chicken and egg thing going on. The presence of many refineries was what drove companies like Air Products (and similar suppliers) to build pipeline-based infrastructure around Houston and in the Gulf Coast area. The refineries came first. I'm sure Air Products would be willing to build an "outside the refinery fence" hydrogen plant and run a short pipeline in at a ND refinery. They were certainly willing to do that when the company I worked for needed a large amount of pure oxygen.

But the potential synergies that existed due to the unique juxtaposition of factors in the Tx-La area exist nowhere else that I am aware of.

I'm just interested if anyone has actually "run the numbers" on a refinery in ND. Once upon a time, quite a few refineries were built here in Washington State to make use of Alaskan crude, and there is no significant pipeline infrastructure up here to handle transport of those refinery by-products. Those refineries are still up and going strong (along with the concomitant increase in gas prices whenever one of them has a shutdown).

11 posted on 08/13/2012 1:02:59 PM PDT by Wonder Warthog
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