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Tuesday, January 20, 2015
Domestic Refining Shifting From Imported Heavy to Domestic Light Crude
Regional refinery trends evolve to accommodate increased domestic crude oil production
Source: U.S. Energy Information Administration Note: As of January 1, 2014, there were 133 operating refineries with atmospheric crude oil distillation units (ACDU) totaling capacity of 18.9 million barrels per stream day. Heavy capacity denotes refineries with coking capacity; light capacity denotes refineries without coking capacity. Note: Click to enlarge.
Recent rapid growth in U.S. production of light tight oil has raised interest in understanding how U.S. refineries, many of which are configured to process heavier crude oil, might accommodate increased volumes of domestic light crude. The U.S. refinery fleet, which is distributed across Petroleum Administration for Defense Districts (PADDs), varies both within and across regions in capacity, quality of crude oil inputs, utilization rates, and sources of crude supply.
Changes to crude oil supply patterns are most pronounced in the Gulf Coast. Net imports into the region have fallen by 2.3 million bbl/d, and light sweet crude imports have been largely replaced by domestically produced light, tight oil.
More than 50% of the country's refinery capacity and most of the country's heavy crude processing capacity is located in the Gulf Coast (PADD 3). The region's 51 operating refineries with atmospheric crude distillation units (ACDU) have capacity totaling 9.7 million barrels per stream day (bbl/sd), 81% of which is located at facilities with coking capacity.
Crude oil production in the Gulf Coast region has increased by 1.9 million barrels per day since 2010. Gulf Coast receipts of crude oil from the Midwest (PADD 2), including both U.S. and Canadian production, also have increased. With more Canadian and domestic barrels moving south from the Midwest to the Gulf Coast region and lower demand for crude shipments from the Gulf Coast to the Midwest, net receipts for the Gulf Coast were positive in October 2014 for the first time since December 1985. This situation, with shipments and receipts of crude oil to and from other PADDs being roughly equal in the Gulf Coast region, is a change from the region's traditional role. The Gulf Coast has long been a source of crude supply for neighboring PADDs, both through the movement of domestic production and from imported crude oil coming into Gulf Coast ports.
With U.S. crude production in 2015 expected to average 9.3 million bbl/d, 700,000 bbl/d above the 2014 level, domestic refiners will continue to face changing supply and demand conditions, even as continued production growth in the first months of the year transitions to a more static production outlook as the effects of the recent sharp decline in oil prices are reflected in drilling decisions. Changes to infrastructure, refinery capacity, crude oil price differentials based on quality, and policy decisions will also affect refinery operations in the coming year. (DOE-EIA)