American refineries ready for surge of light sweet crude – survey

Survey represented 60% of American refineries

A new survey of American refineries shows the domestic industry has plenty of capacity to handle the growing U.S. oil supply.

Veris Consulting conducted the voluntary survey (data was collected Nov.-Dec. 2014) of American Fuel & Petrochemical Manufacturers members and found that refiners have more than enough processing capacity for the increased influx of light sweet crude oil over the next few years. Survey respondents represent a majority of U.S. refining capacity.

Over the past 30 years, many U.S. refiners have added capacity for processing heavy sour crude.

“The domestic energy renaissance is boosting our economy and benefitting our national security, and our refining industry – the world’s largest and most advanced – which is fully capable of handling this production growth over the next few years,” said AFPM President Charles T. Drevna.

A total of 23 companies provided information on 69 American refineries, representing 61 percent of U.S. refining capacity in 2014. The survey found that the respondents are planning to run more than 730,000 barrels per day more very light crude oil in 2016 than last year, and with more favorable access and economics, they have the capability to run 1.5 million barrels more per day of the new crude oil in 2016 than what they ran in 2014.

The AFPM says this does not take into consideration the plans and potential for 40 percent of the capacity not represented in the survey.

The Energy Information Agency’s February forecast shows “lower 48” crude production, which encompasses this light tight oil production, increasing by 720,000 barrels per day – less than the respondents’ plans.

U.S. production averaged almost 8.7 million barrels per day in 2014, a 73 per cent increase over 2008 when production was around 5 million barrels per day. Much of the recent increase has come from geological structures called tight oil formations, and the crude is very light and sweet.

However, over the past 30 years, many U.S. refiners have added capacity for processing heavy sour crude. This apparent disparity has been the source of confusion over refiners’ capacity to process the increasing volume of new light crude, according to the AFPM.

AFPM’s members represent virtually all U.S. refining and petrochemical manufacturing.  With almost 40 percent of the industry unrepresented in the survey, it is clear the U.S. industry in total is planning to run even more volumes of light, sweet crude than reported by the respondents.