Comments on: Any experts on oil refineries out there?

By: Elisson

Elisson — Sat, 24 Mar 2012 05:54:17 +0000

There’s a lot of refining capacity on the U.S. Gulf Coast… and the distribution infrastructure to transport refined gasoline and other liquids via pipeline to major markets. It’s also a lot cheaper to build pipelines than it is to build refineries… and right now there’s enough refining capacity to handle additional crude supplies.

By: JP

JP — Fri, 23 Mar 2012 22:42:08 +0000

I’m no expert on this. What I’ve heard is that the US has a lot of refineries
on the Gulf Coast that are set up to refine Venezuelan crude. Venezuela crude
is a relatively heavy low grade crude similar to the crude coming from Canada’s
tar sands. Under Chavez, Venezuelan production has fallen dramatically so these Gulf Coast refineries have spare capacity, capacity ideally suited for the Canadian tar sands crude.

If one is not going to use these refineries and instead is going to build new refineries for the tar sands, while not build them in Canada near the source and then pump the refined product through the pipeline?

There’s no special need to have new refineries in the US near Canada.
They could be in Canada.

By: Sabba Hillel

Sabba Hillel — Fri, 23 Mar 2012 18:05:31 +0000

President Obama's minions would have to approve any new refineries that might be built. In order to build a pipeline and connect it to a new refinery, the permits for the new refinery would have to be issued before the pipeline was planned. Otherwise, the pipeline could be build and wind up going to someplace that could not handle the oil. In that case, it would turn out to be a boondggle (which is what obama would prefer) and there would be no way to process the oil.

By: L. King

L. King — Fri, 23 Mar 2012 17:35:01 +0000

Not an expert, but I’ve been involved in a couple of discussions about this. The cost to build a new refinery is supposed to be on the order of $1B, and one also has to get past the environmental regulatory issues. If existing refineries have the capacity then it is cheaper to route the oil there.

On the other hand, almost no new refining capacity has been built in North America for a couple of decades. The time frame to get it online is also on the order of several years.

IMHO it might make sense to make smaller scale mini-refineries using latter technology which would be less polluting than current refineries. The net benefit would be less pollution, however the old location is the one that has passed the regulatory process, not the new one.

BTW – It’s an issue here in Canada. The proposal now is to switch the pipeline to the West Coast so that the crude can be shipped to China and processed there, though it could also be shipped to the US. However the proposed path goes through native lands and it has to be raised over the Rockies as oppose to mostly flowing downhill… and so it goes.