Good capacity gains and restructuring highlight worldwide refining

Ashland Petroleum Co.'s St. Paul Park, Minn., refinery has 70,000 b/d of crude distillation capacity. Data on the refinery can be found in the worldwide refining survey, which begins on page 41. Information in the survey reflects refinery capabilities as of Jan. 1, 1998.

In 1997, company mergers and acquisitions rearranged refiners' ranks, and worldwide crude distillation capacity increased 3% to 78.3 million b/d.

Larger growths occurred in some regions: the South America/Caribbean region (7.8%), the Middle East (4.4%), and the Asia/Pacific region (4.3%).

Worldwide vacuum distillation capacity increased 3.5%, catalytic cracking capacity rose 3.9%, and hydrorefining /hydrotreating capacity expanded by 2.9%.

New refineries

Five worldwide refineries, representing 289,400 b/d of crude distillation capacity, shut down in 1997 (see list, p. 41). Meanwhile, six new refineries added 561,650 b/d to worldwide refining capacity:

• Mitteldeutsche Erdöl-Raffinerie GmbH's refinery (the Mider refinery), in Leuna, Germany, has 215,000 b/d of distillation capacity and is owned by Elf Aquitaine.
• National Iranian Oil Co.'s refinery in Bandar Abbas, Iran, has 116,000 b/d of capacity.
• Wepec's refinery in Dalian, China, has 100,000 b/d of capacity and is 20% owned by Total. It is the first refinery in China to be jointly owned by a foreign company.
• Metro Oil Corp.'s refinery in Fujairah, U.A.E., has 74,000 b/d of capacity.
• Uzbekneftegaz's refinery in Bukhara, Uzbekistan, in the former Soviet Union, has 50,000 b/d of capacity.
• Staatsolie Maatschappij Suriname NV's refinery in Wanica District, Suriname, has 6,650 b/d of capacity.

Processing capacities

The past 4 years have seen little change in processing capability. Processing capabilities are defined as conversion capacities (catalytic cracking and hydrocracking) and fuels-producing processes (catalytic reforming and alkylation) as a percentage of crude distillation capacity.

Fig. 1[32,875 bytes], Fig. 2 [32,702 bytes], and Fig. 3 [50,598 bytes] show the trend for the past 11 years of processing capabilities for the U.S., the European Union (EU), and the Asia/Pacific region. Table 5 lists the countries included in the calculations for the EU. Austria, Sweden, and Finland are excluded for the purpose of historical comparison.

Fig. 1 shows that the conversion capacity as a percentage of crude capacity in the U.S. remained relatively the same. In absolute terms, however, U.S. crude capacity increased by 3%, and conversion capacity increased by 3.3%.

The drop in U.S. fuels-producing capability can be mainly accounted for by the losses in reforming capacities of Shell Oil Co.'s Wood River, Ill., refinery and Mobil Oil Corp.'s Paulsboro, N.J., refinery.

The dip in EU conversion capacity can be mostly explained by decreases in catalytic cracking capacities in the U.K. and France. The closure of Gulf Oil's Milford Haven refinery in Wales reduced the U.K.'s conversion capacity. In its Berre l'Etang refinery, Shell France took a catalytic cracker out of service (Feb. 17, 1997, p. 26).

Although the closure of the old Leuna refinery in Germany contributed to the decrease in conversion capacity, the new German Mider refinery offset the decrease.

In the Asia/Pacific region, the increase in conversion capability is a result of China's new Wepec refinery, updated information for Indonesia's Balongan refinery, and improved information about South Korea's Onsan refinery.

Although Fig. 3 shows a sudden increase in processing capacity from 1994 to 1995, the increase does not represent a serious increase in processing capabilities. Rather, it is a reflection of improved data for Chinese refineries in 1995.

Lack of secondary data for Asia/Pacific refiners in general is probably lowering the processing capabilities, based on crude capacities, for this region.

New largest refiners

Table 1 [66,281 bytes] shows crude capacities for the world's leading 25 refiners as of Jan 1, 1998. The privatization of plants in the FSU adds three refiners to the list: Tyumen Oil Co., Sidanco, and Bashneftekhimzavody. OGJ has expanded the list to the top 25 companies, rather than the top 20, to provide readers with more comparative information.

Although the top 10 largest refiners remain relatively the same, there were significant changes in the rest of the list. Besides the three new FSU refiners, there are four new entrants to the list: Elf Aquitaine, Tosco Corp., Yukong Ltd., and Repsol Petroleo SA.

• The change of several FSU refineries from state to private hands did not change the known capacities of these refineries from last year.
• The new 214,620 b/d Mider refinery in Germany securely places Elf into the top 25 with 952,278 b/d.
• Tosco's move into the list was not unexpected. Tosco's new acquisitions of Unocal Corp.'s 76 Products Co. increased its capacity by about 222,400 b/d (OGJ, Nov. 25, 1996, p. 32). Tosco's purchase and start-up of British Petroleum Co.'s Marcus Hook refinery, Pa., increased its capacity by another 170,000 b/d.
• South Korea's Yukong refinery is the only refinery owned by Yukong Ltd. The installation of a fifth crude distillation unit helped to bring the capacity to a whopping 810,000 b/d (OGJ, Dec. 30, 1996, p. 33). As in 1996, the Yukong refinery remains the largest refinery in the world. Table 2 lists the largest refineries in the world.
• Repsol's capacity increased because of more-accurate data. Its South American ownerships were not included in the prior OGJ calculations.

Changed largest refiners

Two refiners dropped out of the "Largest refiners" list:

• Chinese Petroleum Corp. dropped off the list despite its unchanged 770,000 b/d.
• Conoco Inc. dropped out of the list because its ownership in the new Mineral?lraffinerie Oberrhein refinery in Germany, a result of a combined Esso refinery and Oberrheinische Mineral?lwerke GmbH refinery, decreased to 18.75% (OGJ, May 27, 1996, p. 25).
• Had OGJ listed only the top 20 refiners, Idemitsu Kosan would have dropped off the list despite its unchanged 800,500 b/d capacity.

Besides the seven new entrants, significant rank changes occurred with Petroleo Brasileiro SA (Petrobras), Kuwait National Petroleum Co., Total SA and Amoco Oil Co.

• Petrobras' upward movement from tenth to eighth may be misleading. The change is due to more-accurate reporting, particularly for the Cubatao refinery, which had not been represented in previous reports.
• Kuwait National Petroleum Co.'s change in order from sixteenth to thirteenth is due to capacity increases in its Kuwait refineries.
• Total's one-step upward movement can be explained by its 20% interest in the new Wepec refinery in China and by significant capacity increases in its French refineries. Had the FSU refineries not been added, Total would have seen a two-step advance.
• Finally, Amoco fell from thirteenth to seventeenth because of the increased capacities of other refiners, particularly Kuwait National Petroleum, Agip Petroli SpA, and Total.

World's largest refineries

Five refineries are new entrants to the "World's largest refineries" list, and one refinery left the list (Table 2 [92,200 bytes]):

• LG-Caltex's refinery in Yocheon, South Korea, made the list because it nearly doubled it capacity in 1997 by investing in a $1 billion expansion, which included a new crude distillation unit.
• Four FSU refineries made the list: three in Russia and one in Ukraine.
• The Exxon Baytown refinery was omitted from the list in 1996. Its crude capacity is only slightly higher than that of last year.
• Chinese Petroleum Corp.'s Kaohsiung, Taiwan, refinery was removed from the list due to a survey response that split the two capacities of the Kaohsiung refinery into one refinery in Kaohsiung and another in Ta-Lin.

Joint ventures

A number of joint ventures announced in 1996 occurred this year:

• British Petroleum Co. plc and Mobil Corp. continued to consolidate their downstream European operations in 1997. All European operations except for those of Greece have been consolidated. Greece's combined downstream operation is expected to be complete in 1998.
• Ultramar and Diamond Shamrock completed their merger in December 1996. As a result, the previous Ultramar and Diamond Shamrock refineries in the U.S. and Canada are listed as Ultramar Diamond Shamrock in this year's survey.
• The merger of Elf Oil (U.K.) Ltd., Gulf Oil (Great Britain) Ltd., and Murco Petroleum Ltd. was cancelled in May due to the inability to reach an agreement.
• The largest proposed downstream joint venture of them all, Shell Oil Co., Texaco Inc., and Saudi Aramco, is being examined by the Federal Trade Commission for possible antitrust violations.

Crude distillation

Table 3 [79,284 bytes] takes a look at worldwide refining operations, divided by regions. Crude capacities have increased in every region since last year's survey. The South America/Caribbean region experienced the largest percentage gain in crude capacity, but the Asia/Pacific region experienced the largest absolute increase.

More than half of the increase in crude capacity in the South America/Caribbean region came from Brazil. Updated information from the Cubatao refinery increased the crude numbers by 155,029 b/d. Major crude capacity gains were seen at the Canoas, Rio Grande do Sul (107,275 b/d), the Mataripe, Bahia (118,971 b/d), and the Paulinia, Sao Paulo (31,278 b/d) refineries.

The following upgrades contributed to crude capacity increase in the Asia/Pacific region:

• The LG-Caltex Yocheon, South Korea, refinery built a fourth 220,000 b/d distillation unit.
• The Yukong Ulsan, South Korea, refinery added a fifth crude distillation that increased its capacity by about 48,000 b/d.
• The new Wepec Dalian refinery contributed 100,000 b/d to China's crude capacity.

Catalytic cracking

Worldwide catalytic cracking operations saw a 3.9%, capacity increase. The largest increases were in North America, the Asia/Pacific region, and the South America/Caribbean area.

A large portion of the 196,700 b/d catalytic cracking increase in North America was due to the reappearance of 93,000 b/d in Sun Refining & Marketing's Marcus Hook, Pa., facility, which did not report any catalytic capacity in 1996. Also, putting Tosco's Marcus Hook, Pa., unit back on-line, contributed 50,000 b/d to catalytic cracking capacity.

The Asia/Pacific area showed a 187,100 b/d increase in catalytic cracking capacity. The new Wepec refinery contributed 37,000 b/d. Improved information about Indonesia's Balongan refinery adds 83,000 b/d to the catalytic cracking capacity.

The South America/Caribbean area experienced a 79,523 b/d catalytic cracking capacity increase. Petrobras' Paulinia, Sao Paulo refinery in Brazil increased its catalytic cracking capacity by 37,438 b/d. Hess Oil Co.'s St. Croix refinery in the Virgin Islands expanded its fluid cracker by 20,000 b/d.

Catalytic reforming

Worldwide catalytic reforming capacity increased only 1% since last year's survey. North America had the largest reforming capacity change, a decrease of 88,600 b/d. The Asia/Pacific region and western Europe had increases of about 51,000 b/d and 40,000 b/d in reforming capacity, respectively.

The U.S. capacity declined 89,195 b/d. Despite the additional 47,500 b/d U.S. reforming capacity that came on-line because of the start-up of Tosco's Marcus Hook refinery, the U.S. reforming capacity still dropped.

Shell Oil Co. did not report one of its three reforming units at the Wood River, Ill., refinery, which had 84,000 b/d of reforming capacity in 1996. Also, the shutdown of a reforming unit at Mobil Oil Corp.'s Paulsboro, N.J., refinery accounted for a 40,400 b/d decrease in reforming capacity.

LG-Caltex added a new 54,500 b/d continuous-regeneration reformer to its Yocheon refinery in South Korea. About 20,000 b/d of the increase is attributed to a new continuous-regeneration reformer at Esso's Sriracha refinery in Thailand. Chinese Petroleum Corp.'s Ta-Lin refinery decreased its continuous-regeneration reformer capacity by 25,000 b/d to 55,000 b/d.

Western Europe's reforming capacity increased because of two refineries. Esso SAF started a 19,000 b/d semiregenerative reformer in Fos sur Mer, France. In the U.K., Esso started two new reformers in Fawley, England: one 37,100 b/d semiregenerative reformer and one 23,500 b/d cyclic reformer.

The U.K. lost 22,500 b/d of reformer capacity with the closure of Gulf's Milford Haven, Wales, refinery.

Hydrocracking

Although worldwide hydrocracking capacity decreased by less than 1%, there were significant capacity changes within the Asia/Pacific, Western Europe, and the South America/Caribbean regions.

The Asia/Pacific region's 64,400 b/d increase in hydrocracking capacity mainly represents improved information for the South Korean Onsan refinery. In addition, Tonen Corp.'s refinery in Kawasaki, Japan, added a new 22,300 b/d vacuum hydrocracker in the past year.

Much of the 40,800 b/d hydrocracking capacity loss in Germany can be accounted for by the closure of the Leuna refinery, which had 48,000 b/d of hydrocracking capacity. Total's Vlissingen refinery in the Netherlands mitigated the hydrocracking capacity loss somewhat by expanding its capacity by 6,600 b/d.

The decrease in South America/Caribbean hydrocracking capacity is solely due to a reporting error in catalytic cracking and hydrocracking.

Regional comparisons

Table 4 [293,799 bytes] compares changes in processing capacities since last year's survey for the U.S., the EU, and the Asia/Pacific region. U.S. crude capacity increased 465,800 b/d, or 3%.

EU's crude capacity increased by 166,100 b/d, or 1.4%. Of the three regions, the Asia/Pacific region had the largest crude capacity increase, 708,415 b/d, or 4.3%.

The U.S. experienced a significant increase in catalytic cracking capacity (224,700 b/d or 4.3%) and in hydrorefining/hydrotreating capacity (244,300 b/d or 2.4%). Since the ratio of these capacities to crude capacities relatively remains the same, the increases in these secondary processes may have been necessary to accommodate more crude.

In the EU, thermal processes showed the largest percentage change, a decrease of 4.3%. Hydrorefining/hydrotreating capacities in the EU have increased 223,100 b/d since last year's survey, an increase of 3.4%.

The Asia/Pacific region has achieved major gains in most categories. Catalytic reforming, catalytic cracking, and hydrorefining/hydrotreating have gains of 3.8%, 5.9%, and 2.5%, respectively.

Construction

Table 4 also shows the estimated increased construction that will occur in 1998 and 1999. These estimates are based on reported projects, also represented in OGJ's semiannual construction report (OGJ, Oct. 13, 1997, p. 57).

In the U.S., projects are expected to increase U.S. crude by 158,500 b/d in 1998. The largest of these capacity expansion projects will be a new third crude distillation unit in Mapco Petroleum Inc.'s North Pole refinery. Based on known projects, U.S. hydrotreating capacity is expected to have increased by 19,000 b/d by the end of 1998.

Planned construction reports for 1998 show that the Asia/Pacific region expects a huge increase of 591,000 b/d of crude capacity. Furthermore, hydrotreating capacity is expected to increase 149,500 b/d, due in large part to tightening product sulfur specifications.

Large regional refiners

Refiners located in the U.S. and EU with more than 200,000 b/d capacity are ranked in Table 5 [309,913 bytes].

Ultramar Diamond Shamrock (UDS), formed in December 1996, is a newcomer to the list. UDS owes almost half of its capacity to its purchase of Total Petroleum North America Ltd in September. Having acquired Total's refineries in Denver, Alma, Mich., and Ardmore, Okla., UDS now owns seven refineries in the U.S. and Canada.

Tosco makes a significant move from thirteenth to sixth place on the list. After Tosco acquired most of Unocal's California refineries, Unocal's sole refining asset was a 50% interest in the Leman, Ill., refinery, operated by Petroleos de Venezuela (Pdvsa). In January 1997, Unocal washed its hands of refining when it sold its 50% share to Pdvsa (OGJ, Jan. 6, 1997, p. 28).

Valero Energy Corp. is also new to the list. In last year's survey, Basis Petroleum Inc., formerly Phibro Energy U.S.A. Inc., had three refineries in the U.S.: two in Texas and one in Louisiana. With its acquisition of Basis in May, Valero now owns four U.S. refineries with a total capacity of over 430,000 b/d.

In Europe, Agip Petroli SpA and BP dropped from last year's rankings. Agip dropped two places because 50% of its Milazzo refinery was purchased by Kuwait Petroleum Co. (OGJ, Oct. 14, 1996, p. 36). BP dropped significantly in rankings because its merger with Mobil left it with only three qualifying European refineries for the list.

Ervin is the only new entrant to the list. It is the owner of the new refinery composed of the combined Raffineriegesellschaft's Vohburg/Ingolstadt refinery and Erdölraffinerie Neustadt GmbH's Neustadt refinery. Ervin is made of the following partners: BP 30%, Mobil and Ruhr 25% each, and Agip 20%, (OGJ, Oct. 6, 1997, p. 39).

Unlike last year, Petronor is not listed by itself because it is owned by Repsol. OGJ makes this correction in this year's table.

Table 6 [101,525 bytes] compares the total capacities of large U.S. refiners (200,000+ b/d) with smaller ones. Consistent with the past several years, the smaller refineries are losing their share of U.S. refineries to the larger companies. The percentage of U.S. refineries owned by larger companies increased from 85.7% to 86.9%.

Survey changes

This year, OGJ is providing readers additional information by making a distinction between refinery-owned hydrogen plants and hydrogen plants operated by gas-supply companies. The distinction is made by a footnote designating that on-site hydrogen capacity is provided by a third party. Although third-party hydrogen plants are built on or near the refinery, they are owned and operated by industrial gas companies.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.