[QUOTE=Trip7;4028131]It is apparent you have more knowledge regarding the oil/refinery industry than most of us here.

Can you provide a basic explanation of a few numbers that don't fit the rhetoric?

The US extracts about 13.5 million bbls/day of oil.
US refineries use about 16.5 mbl/day.
Yet we not only export crude oil, we seem to be actively encouraging this as national policy.
Is there a basic 101 type reasoning for this?

Total distillate produced in the US is about 21.5 to 22 mbl/day.
Total consumed in US is about 20.5mbl/day.
Is the additional 8 mbl/day produced only natural gas and ethanol equivelencys?
Or do we do "gaming" by including the 10%volume increase from refing and other such things, which change the numbers from a field production perspective to an end product perspective.

Do you have insight as to how long the oil production from basins that are asseessable primarily only by fracking will continue to be productive?
(obviously price gets involved.. $100/bbl can encourage a lot more drilling than $60 oil)

 

Trip7.
I just made a post with questions on the oil industry i meant for you.
Somehow I managed to post it as a reply to madmax.
Please see my earlier post.
Apologies to both you and madmax for my carelessness

 

Short answer: It's complicated, but there are reasons.

Refineries are optimized for specific types of crude stock (that come from different regions) and are also optimized to produced specific products. That came about based on where crude was economically available from at the time, many decades ago.

The marketplace and logistics systems evolved around that, including extremely costly infrastructure like pipelines and big-ass tankers. Certain types of crude (from certain regions) goes to certain refineries, and the distillate products then go to certain customers.

The US probably could become oil-independent. The problem is that would require a very major re-configuration of refinery and logistics infrastructure. Costly and disruptive.

It would also require big changes to the legal infrastructure to isolate us from the global oil (and gas?) market, which would also be costly and disruptive. And the there would be additional disruption as the global market and economy reacts to our changes. Likely some of that retaliatory in nature (Japan attacked the US in 1941 basically because we cut off their oil).

So in reality it's not happening, unless it comes about in the natural course of recovery after some apocalyptic catastrophe.


As you say, higher prices will justify access to additional deposits which are not economical to produce at lower prices. That's not an infinite sliding scale, but basically we've just barely scratched the surface of frackable reserves (in the US). It's also expected that technological advances will increase access even at lower prices.

 

“Big oil” wants to own the oil before it comes out the ground, and refine it at facilities they already own. Cheapest places to source oil are Africa and S America and Gulf.

Drilling company’s want to drill for oil and sell oil for profit to whoever pays the most to refine it.

Drilling company’s want top dollar and lobby government to sell their product overseas.

They don’t want major oil company’s squeezing them out of their profits. Major oil wants to pay them a labor rate for drilling and cut out the equity of drilling for profit.

 

The U.S. will never be energy independent simply because we don’t produce enough heavy crude. Most of what we get here is light sweet crude. North America independent would be possible but we’d have to build new or rework a good portion of our refineries.

 

My understanding as well. We’re simply not set up to refine what we pull out of the ground.

 

Well we had a president that killed a major pipeline from Canada to push heavy crude to us.

It was determined more palatable to haul it on rail at an added carbon and actual cost because it feels more temporary than a pipeline. People’s feelings matter, a new pipeline is too long of a commitment to oil.

 

We are set up to run the cheap stuff, and sell the expense stuff.

Cheap energy is preferred to independent energy most of the years.

No one advocates independent energy unless they think it means cheaper energy.

The less developed world is setup to run the expensive stuff and sell the cheap stuff because to refine/process the cheap stuff requires more development.

 

[QUOTE=MaxQ;4028332]Rickair answered much of these questions very well, particularly about why the US exports so much of its light sweet oil. Quick summary:

• US Refineries are optimized for heavy sour crude. US production is mostly light sweet crude.
• It would take years and Billions of dollars to upgrade US Refineries for light sweet crude
• Light sweet crude produces lower yields of jet fuel/diesel and higher yields of gasoline/Petrol

The majority of the 10% volume increase is Natural Gas Liquids. These count as "petroleum liquids" but are not a crude oil substitute. Many politicians use the NGL inclusion in the data to make the highly misleading "net exporter" claim.

As far as the Shale basins the Permian remains the only basin with meaningful inventory in quality, Tier 1 locations. All other Basins have rolled over past their peak and are in terminal decline. $60 Oil certainly has far less economic drilling locations vs $100. US Shale Production will continue for quite a long time , although production numbers will likely be flat at best, and likely negative.

 

[QUOTE=Trip7;4028668]
It may be a little misleading to say “upgrade”.

Sour crude is corrosive to equipment so US refinery’s spent billions to upgrade equipment to process it because it’s sourced from poor countries and acquired cheap.

Sweet crude is less corrosive to equipment and inferior metals can safely be used so the rest of the world built to the minimum. Whats makes sweat crude more expensive is it can be processed at most all refineries and sour cannot.

Your basically saying you have to upgrade your salt water engine to operate in fresh water.

Its definitely a loss of efficiency to spend billions in upgrades to run sour crude then arbitrarily stop and buy sweet crude.

You don’t have to upgrade a 777 to fly 100 people 500 miles, but it’s a non starter business model because of a gross loss of efficiency. After you spent so much money investing in the equipment that can do more.