BONNER & MOORE SEES GAIN IN U.S. DELAYED COKING CAPACITY

U.S. refiners will have to add 230,000-310,000 b/d of delayed coking capacity by 2010 to process expected increases in domestic heavy oil production. In the next 20 years, U.S. refiners may spend as much as $7 billion, including $3 billion to add conversion capacity and $1 billion to maintain existing distillation capacity. The remaining $3 billion will be spent to comply with the 1990 Clean Air Act amendments.

Dec. 27, 1993

2 min read

U.S. refiners will have to add 230,000-310,000 b/d of delayed coking capacity by 2010 to process expected increases in domestic heavy oil production.

In the next 20 years, U.S. refiners may spend as much as $7 billion, including $3 billion to add conversion capacity and $1 billion to maintain existing distillation capacity. The remaining $3 billion will be spent to comply with the 1990 Clean Air Act amendments.

Those are the conclusions of a Bonner & Moore Management Science study of heavy oil processing. The study was conducted for the National Institute for Petroleum Research (Niper), Bartlesville, Okla.

Increases in U.S. conversion capacity are based on Niper's predicted 300,000-930,000 b/d increase in U.S. heavy oil production and fueled by:

Estimated 1%/year growth in U.S. demand for petroleum products.
Incremental crude supplies continuing to come from the Middle East.
A 2%/year decline in U.S. crude supplies, mainly Alaska North Slope (ANS) and Midwest light, sweet oil. U.S. refiners will cross the "50% threshold" for crude oil imports by 1996.
An increase in refined product prices caused by logistical difficulties related to decreased ANS production,

In terms of logistics, the study predicts West Coast refiners will encroach on crude supplies otherwise destined for other areas, and Midwest refiners will increase imports to make up for a shortfall there. Bonner & Moore adds that the current pipeline system will significantly reverse its flow pattern.

The study predicts moderate increases in crude requirements for refinery runs (Table 1). Those predictions do not take into account small amounts of associated condensates in the refinery intake slate.

Bonner & Moore predicts a 2% year decline in domestic crude production, mainly ANS (Table 2).

California heavy crudes will show a modest yearly production decline. Imports from Africa, Europe, and Asia are expected to decrease as current production rates in some countries become unsustainable. New U.S. refined product specifications also will curtail the availability of crude for export to the U.S.

Crude gravity will change little in the coming decades, says Bonner & Moore, but sulfur levels will increase as higher sulfur Middle East crudes replace declining U.S. production.