Why US refineries really need Mexican oil

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FlyingPenguin
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Why US refineries really need Mexican oil

Postby FlyingPenguin » Tue Jun 04, 2019 12:32 pm

Interesting. This answers a question I had: Since we are now exporting oil and have become one the largest oil producers thanks to shale oil, I was wondering why we're still so dependent on foreign oil.

It's because we're also the biggest refiner of oil, and the majority of our refineries are designed for "heavy" crude that is native to most countries (Saudi Arabia, Venezuela, Mexico, Canada).

Our oil is "light" crude and most of our refineries can't handle it unless it's mixed with heavy crude.

https://www.msn.com/en-us/news/other/wh ... iWo#page=2

The problem is that not all crude is created equally. While the United States is now the world's leading producer of oil thanks to the shale boom, most of those barrels are very light. That high-quality crude is a poor match for the Gulf Coast's decades-old refinery system. Shale oil is blended with heavier barrels to allow refiners to maximize production.

US refiners used to rely on Venezuela for those heavy barrels. However, US oil imports from Venezuela have vanished because of the Trump administration's sanctions on PDVSA. The United States imported zero barrels of oil from Venezuela last week, down from 517,000 barrels per day a year ago, according to the Energy Information Administration.

Normally, the United States would turn to Saudi Arabia, which also produces heavy barrels. But Saudi Arabia has slashed shipments to the United States as part of OPEC's effort to boost prices.

Canada, another major producer of heavy crude, is already the leading source of foreign oil into the United States. And a shortage of pipelines from Canada will make it hard to send much more.

"There are very few alternatives in the short-term," Ryan Fitzmaurice, energy strategist at Rabobank, wrote in a note to clients.
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Re: Why US refineries really need Mexican oil

Postby Pugsley » Tue Jun 04, 2019 12:46 pm

You would think light oil would be easier to refine in equipment designed for heavy oil... why not just build a new unit to work well with light oil? Its not like the light oil is going anywhere might as well adjust to it. Instead of adding shitty heavy oil to it to process it.

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Re: Why US refineries really need Mexican oil

Postby FlyingPenguin » Tue Jun 04, 2019 12:53 pm

I'm guessing it's not worth the expense to retool a refinery since the rest of the world produces heavy crude, and we are the largest refiner on the planet.

That's another interesting facet of this. We import a lot of oil that is then exported as refined fuels to other countries - often the same countries we get the oil from since many of the most oil-rich countries don't have the tech, stability or infrastructure to refine their own oil.

Just shows you how interconnected things are.
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Re: Why US refineries really need Mexican oil

Postby Pugsley » Wed Jun 05, 2019 7:49 am

Yeah I knew about all that. If they built a unit for light crude I bet they could run used motor oil through it as well and have good results. Then they could cut the light crude with recycled oil instead... but what do I know.

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Re: Why US refineries really need Mexican oil

Postby Key Keeper » Fri Jun 07, 2019 10:20 am

Shale gas isn't going anywhere. Since they developed better, more efficient ways to extract it, its become competitive with off shore heavy crude. Right now the O/G market sector is booming. There is a slight lull in projects based on the past trend and some of the larger pipeline companies like Magellan, PAALP, and Targa are trimming capital expenditures back but its still expected to continue the upward climb. To balance this out, many of the fractionators are being upgraded, and additional tank farms being constructed. Its trickle effect, and eventually the platforms will meet, and refining light crude will be efficient. Another thing is the Saudi's have their own refining plant now that makes TX plants look like childs play. However, they put all of their eggs in one basket so that will be a deciding factor in OPEC scope from a global supply outlook. Venezuela is going to be essentially useless at the end of the day. Sitting on a black goldmine with no real way to export will be their demise. Maybe this russian "collusion" will turn into a good thing with some heavy crude from ole putin LOL.


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