A committee report from the Ohio Oil & Gas Association (OOGA) gives an interesting look at crude oil production and refining in the northern Appalachian basin in 2001-02.
Two plants, the Ergon-West Virginia Inc. refinery at Newell, W.Va., and the American Refining Group facility at Bradford, Pa., process 95% of the oil produced in four northern Appalachian basin states.
The association's crude oil committee visited both plants in mid-2001.
"The Appalachian basin currently produces roughly 28,000 b/d of crude oil," the committee reported. "Of that total, Ergon and ARG refine 18,000 [b/d] and 8,500 b/d, respectively. The remaining 1,500 b/d flows to [Marathon-Ashland Petroleum LLC refineries], either at Canton, Ohio, or the Catlettsburg, Ky., locations."
Ohio accounts for 18,000 b/d, or 65%, of Appalachian crude production, followed by Pennsylvania at 7,000 b/d, or 25%. West Virginia and New York total the other 10%.
Ergon refinery
The committee noted that Ergon had invested $70 million since purchasing the Newell refinery from Quaker State Corp. in 1997.
Ergon has boosted capacity to 18,000 b/d from 10,000 b/d at Newell, adjacent to Ohio and Pennsylvania near the northern tip of the West Virginia Panhandle. The $70 million went for refinery upgrades and improvements to terminals at Marietta and Magnolia, Ohio, and Mercer, Pa.
Ergon wants to boost throughput to 20,000 b/d this year and 25,000 b/d in 2005, but area production will not fill even the nearer of these goals. The crude must come from other regions.
OOGA said: "Ergon has assured the Crude Oil Committee that the incremental barrelsellipsewill not displace Ohio crude and that Ergon will, as in the past, continue to accept all Ohio crude oil even during periods of oversupply."
Other issues that face Ergon in hiking capacity even to 20,000 b/d include debottlenecking, air emissions concerns, and salt water disposal.
Produced fresh and salt water are classed as hazardous waste once they reach the refinery and must be disposed of properly. Handling them has become increasingly difficult under current state and federal permits at higher throughput levels, the committee said.
"Therefore, the removal of free water by producers before shipping oil is a critical step in reducing the amount of water reaching the refinery. These problems are magnified in the colder months as the ambient temperatures reduce the tendency of the water to naturally separate from the crude oil."
Ergon tests incoming crude for salt water and other contaminants, such as organic chlorides, silicones, and heavy metals, that can damage processing units and are associated with poor grades of paraffin solvents and used motor or compressor oils. Fortunately, incidents of contaminated crude have remained isolated.
American Refining
Capacity of ARG's Bradford plant is 8,500 b/d, of which 5,100 b/d comes from Pennsylvania and New York fields.
ARG bought the plant from Witco Corp. in March 1997, when just above 4,000 b/d of its crude runs came from Pennsylvania oil fields.
The increase resulted from an uptick in drilling in surrounding counties. Operators drilled 662 wells in McKean and Warren counties during January 2000-August 2001, state figures show.
"This high level of drilling activity in the Bradford area and the recent purchase of Belden & Blake [Corp.'s] Sandyville terminal should translate into a stable or increasing supply of crude oil for ARG for some time to come," the committee said.
The ARG refinery, at its present site 120 years, is one of the world's oldest. Upgrades are gradual. The 1985 vintage crude unit can easily run 9,000 b/d. ARG has broken ground for addition of an isomerization unit to start up this summer and hopes to add a hydro- treater later.
The future
The committee considers the refineries to be crucial to the health of the producing community in Ohio and serves as a communication channel between refiners and producers.
Runs at the two refineries have slipped since the committee's visits, to 16,000 b/d at Ergon and 8,200 b/d at ARG as of Dec. 1, 2001.
"These reduced throughputs are primarily due to poor weather limiting access to some tank locations as well as some producers simply holding oil due to low commodity prices," the committee opined.
The committee urged the association's member producers to provide the refineries with crude oil free of contamination and low in BS&W: Refineries should "provide producers with reasonable pick-up times to avoid shut-in of wells, prompt service during critical times, and the orderly and timely distribution of oil revenues."