Heavy oil refining and transportation: effect on the feasibility of increasing domestic heavy oil production

As part of a programme to assess the feasibility of increasing domestic heavy oil production from US reservoirs, a study of the crude oil transportation system and petroleum refining industry has been initiated to determine their ability to accommodate additional domestic heavy oil. This paper summarizes refining trends and potential limitations in the production/transportation/refining network that may influence the expansion of domestic heavy oil production outside the current heavy oil producing areas. Although the number of refineries has decreased over the past decade, the remaining large refineries have been able to stabilize charge capacity and increase refinery throughput. A few refineries have been designed to economically process select heavy oils and obtain acceptable yields of products. However, refiners seek more light sweet crude oil and less sour or heavy crude to meet the requirements of clean fuels as mandated by the Clean Air Act Amendments of 1990. Transport of heavy oil poses significant problems in that there are limited heated pipelines, and transport of heavy oil to distant refineries adds to the cost of heavy oil production. Addition of significantly more heavy oil, either domestic or imported, will substantially reduce refinery efficiency and throughput affecting yields and margins. This will not change without significant investment in refinery modification to be able to process heavy oil.