Crude oil processing capacity of U.S. refiners is shrinking when products demand is rising.
In a statistical report for 1992, the American Petroleum Institute said U.S. refinery capacity shrank, pressured by the costs of more stringent product requirements and generally lackluster refining economics.
API said, "Over the last several years, gradually deteriorating crude quality and more stringent requirements for gasoline vapor pressure, oxygenated gasoline, and upcoming reductions in allowable sulfur content of diesel fuels have made it necessary to continue upgrading refineries even though overall demand growth has been modest to nonexistent."
REFINING CAPACITY
Shutdowns of marginal refineries and industry restructuring reduced the year's average reported distillation capacity by about 200,000 b/d to 15.5 million b/d.
Capacity in operation, at about 14.9 million bid, averaged about 270,000 b/d less than 1991 despite the 1.6% rise in domestic demand. On either basis, distillation capacity was at its lowest level since 1986.
Capacity utilization averaged almost 88%, the highest rate in 15 years and very close to the record 91% set in 1973. Petroleum consumption increased about 1.6% last year.
API said, "Demand for petroleum, needed to fuel a growing economy, will likely increase and the huge costs of compliance with environmental laws and regulations, particularly the requirements of the Clear Air Act, are likely to cause further reductions in U.S. refinery capacity.
"The comparison is not precise since product production capacity depends on many factors in addition to crude oil distillation capacity. But the trend in distillation capacity clearly points to increased product imports in the future."
Deliveries of petroleum products to U.S. customers averaged 16.985 million b/d in 1992, crude production dropped 3.8% to 7.132 million b/d, and imports rose 2.9% to 7.947 million b/d.
EIA'S OUTLOOK
Meanwhile, the Energy Information Administration said U.S. energy demand will grow slowly during the next two decades as a result of increases in energy conservation measures and advances in energy efficient technologies. Total energy demand will increase to 102-112 quadrillion BTU/year.
World oil prices will average $1838/bbl and natural gas wellhead prices $3.20-4.40/Mcf in 2010.
Net oil imports will amount to 9.213.6 million b/d in 2000 and 10.3-17 million b/d in 2010.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.
