I am not an expert in this at all. I just know that US is better equipped than China and India. Not better equipped than the world. I don't know anything about EU refining capacity.



They are making lots of money, yes, but they are only ones is an incorrect assumption. Exxon, Chevron, etc all have some sour capacity. Valero and the other refiners you mention are specialists who are dependent on refining and don't have upstream production. The others have upstream production, so thus guaranteeing sweet crude oil for their sweet crude processors. These larger refiners also have additional capacity- often these are designed for processing sour. Exxon and Chevron have major sour crude refineries.




That is true because of EPA regulations. To comply will cost a lot. Not necessary old = costly.



I have never seen 10 years.
It should take a few hundred million, and a couple of years if equipment is available.



Probably more sour in the world. Mexico and Venezuela have a lot of sour refineries built with US technology. I know we import processed fuel from Venezuela. I wouldn't be surprised.

The reason i don't post links is that official sources for these are in ugly looking pdf reports. But here you go. It will take you awhile to find what you are looking for and then you will need to compile the data. I don't know if any reports giving sour/sweet processing capacities.
Easy estimate can be done by US utilizing heavy, sour oil. Venezuela and Mexico imports are mostly heavy sour types. California production is also heavy sour type. Just taking those rough numbers will allow you to see that US is heavily into sour processing.

Links:

Link 1

Link 2

(Edited by jato to shorten links)

Thanks nth,

I will use the links,

I heard the 10 year figure listening to the news. I also think I heard that mentioned in the recent CNBC interview with the Head of SAramco.

I think it must be because they have to do it piecemill. Shut down the refinery for retrofit, and they would have to rotate through the field. That is supposition on my part. From the statments I see it is hard to understand exactly what they mean. Basic news blurbs for a given industry. They could very well mean it could take up to 10 years to retrofit an existing sweet to sour for gasoline and lower grade products.

I aslo heard the figure in the cost of doing this would be "billions" . maybe millions for a single refinery, but billions for the whole lot. IMO projected dollar costs are as much propaganda as anything. What and how long it would take, I don't know. I don't know if the oil industry would use figures designed to help them in an economic sense. I mean would they,.. would ever, ever exploit the public on purpose.....

nth, if you don't mind can you answer these questions briefly (and ball park is fine) and/or links to reports with the info.

Can you give me a ball park for the percentage of the US oil refined that is sour.

Is that sour used for heating oil or lower grade products (not gasoline) in the US. (can those refineries also do gasoline)

Is it easier for a refinery already set up to refine sour for products other than gasoline to be retro fit

Just curious, I am not familiar with the refinery situation nuts and bolts except from what I see and hear from news.

I think the refinery situation is going to cause shortages and raise prices from what I keep hearing the Saudi's say. I bet in the last few days all the interviews and the visit with the President, I bet I heard the word refinery in every broadcast. The Saudi's keep saying they will only deliver more sour and that they see lack of refineries to process sour crude as the problem.

SidneyTawl,

I am thinking 10 years maybe figure to build a brand new facility or to upgrade many existing facilities and not just one facility. Or maybe to convert one of those mega facilities to 100% sour from 100% sweet. Then it may take 10 years and a billion or more dollars.

Figures that I have seen are reported by Valero and other small refiners. Large oil companies like Exxon and Chevron have not disclosed sour vs sweet refining costs etc. If they have, I missed it.

As for estimating how much sour crude refining capacity, I think a fair assessment is 2/3 of US refining capacity, cuz US strategic reserve has 2/3 sour. Another way to estimate is to add up refining capacity of all known sour crude processors like Valero, etc. For Chevron, I know all their refineries in California can process sour. Actually, I think California is overwhelming sour processing state. Exxon has at least one major sour refinery. Citgo aka Venezuela has several refineries in US that process exclusive sour from Venezuela.

As for the world, citing Alexander's article quoting from Opec states 45% of the world's refining capacity is sour. China has 30% capacity.

Now, trying to get the breakdown of these facilities for gasoline, etc... I don't have the inside info on that. I don't think they are public. I know many do process gasoline from sour. Taking Chevron, they supplied a major portion of gas for California- one of the most stringent laws in the world. The facilities here process sour as local oil and imports here are mostly sour. I know historically Chevron facilities also process sweet even though they are designed for sour, but that was because sweet prices drop so low in the 90's. They got their sweet from Alaska. Now, I would guess they are sour as much as possible.

If I come across some numbers, I will send them to you.

Just an fyi- refinery shortage is a recent thing. During the last decade, we had more capacity than demand, so many refineries were closed down. Also, the price difference between sour and sweet collapse as Africa and North Sea expanded sweet crude production. Refineries suffer huge losses in the 90's as a result of this. Things didn't look better until the recent rise in the past couple of years.

That is why economists are so set against us PO, cuz they see this as short term situation caused by underinvestment and price crash of the past and it will take a few years to correct this. Not overnight. And not about PO.

Of course, there are plenty of evidence proving them wrong. But that is another argument. Thanks to Mark, I now can quote the IEA as saying 2010 is non-opec peak!

Thanks again nth,

I googled and didn't come up with much. I specifically tried to find info on costs of converting a sweet to sour, and didn't find much. I wonder if the verbage industry insiders would use for refurbishing from sweet to sour is what is needed, if they even dare publish such info.

Well the President gave his speech today. I watched most of it. Nothing new, but again the new "consisten" word out is "refinery". Pres made a point of refinery problem. I also loved the line, "this sort of snuck up on us" or something like that in reference to the recent rise in oil prices. Said it with a straight face.

Arabs say lack of sour refineries is problem
US president says lack of sour US refineries is a problem.

I would expect to see a barrage of feel good ads from Refinery and other types of Energy companies soon. Mixed with ads about GOVERNMENT regulation is the problem for lack of new/switched refineries.

"it snuck up on us".





This President has a habit of letting things "sneak up on him".

Of course we all know it didn't sneak up and he has known about the /oil/refinery problem for quite a while.

The Caspian Sea bust has thrown their "world" for a loop and there was not even then a Plan B.

Okay, if you want to learn about refining, this is elementary slide show that is a good introduction.

http://media.corporate-ir.net/media_fil ... AL_new.pdf

You will see it has sour/heavy crude breakdown per company.
It doesn't really delineate the difference between heavy/sour/intermediate/etc....

Well, only the small refiners publish these numbers as that is all they do, so they can't hide their capital expenses.

Valero spend $350m in Texas City to upgrade and add 45kbpd in heavy sour processing- coker. Implemented in 2 years.

There is a long list for the current merger and what the investment and output are:

http://media.corporate-ir.net/media_fil ... o_pco3.pdf

I am utterly shocked to hear that the Christian right is joining environmentalists in pushing Bush to conserve. They are doing it for different reasons, but still I thought they never come together.

Bush's plan is very interesting that he is adopting biodiesel and hybrids. I thought Bush and GOP said Americans don't want to drive in small tiny plastic cars.

Anyways, Dems are going to offer more tax incentives and let's see if Bush supports those or not. Then, I will think he is serious. I still think he is paying lip service.

I think a gasoline tax to subsidize building refineries is a better way to go than gov't waiving regulations as Bush is seeking.

I wonder what kind of nuke power he wants. The new unproven safe ones or the old dangerous ones. One is supposed to be safe, but not built yet, so unproven. The other has caused accidents before, but are proven and we know the dangers of it.

I don't know how to "copy" the page, and these may be famous last words, but last I looked we were well on the way to breaking the $50 floor.

I looked at Wednesday data and there is no slowing down in gasoline consumption from what I see.

OPEC is pumping more oil now, so market is oversupply and the investment bankers/speculators seem to run out of cash or they think 50+ price is adequate, so not buying much more. The drops have been big, but there are more days where it increase in price then drop, but it has been consistently in the 50-58 range.

I will bet that it won't hit mid 40's.

light sweet crude oil is back up, any idea why? I was expecting a sharp drop like yesterday!

I'm a bit surprised also. I thought with the news about GDP, combined with Bush's speach and the inventory situation we would see a slide down into the high 40's. I think we are seeing real evidence that Peak Oil is either here or approaching. Simply the movers and shakers are not being affected like they were before by the normal indexes. They are looking farther ahead and see past the next week or month. Fundamentally there is little or no gap left between supply and demand. I think now that even a small disruption will have very large implications in crude prices.

Put it this way, if you had a barrel of oil, would you sell it for less than 50 bucks?

Didn't think so....

I hope people do know that the current price is propped up by market investors. The reason this is sustainable is because a couple of these major investors are actually taking delivery of crude oil. When you have investors not having to dump their paper crude when contracts expire, the prices will not drop.

Also, despite the high inventories and bad economic data, the refineries are still buying record amounts of oil for June as they have not scaled back their production for this summer.

Also, despite record gas prices at the gas stations, US gasoline consumption has not drop.

There is very little reason for oil price to drop. The only price that should drop is the sour crude, which OPEC has promised to pump out 500k or more. That oil increase has no effect on the NYMEX, which is sweet crude.

Just checked:
$49.90...