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August 26, 2005
Pumping Past the Peak
By: Rowan Wolf
Continuing to pump past the peak will be very expensive and increasingly less efficient. I tried tracking down how many refineries are capable of "cracking" heavy crude. While I could not find the answer to that, what I did find indicates that they are a small minority and that the process is largely controlled by one US firm (no, I don't know which firm, but hopefully one of you can fill in that information).
MEHRNEWS "Refining super-heavy crude oil and turning the heavy oil into valuable products like gasoline and liquid gas calls for the specialized and state-of-the-art technologies that are exclusively owned and controlled by the U.S. firm and are out of our reach nevertheless, in our bid to do the job, we will employ alternative technologies although a little more expensive."
In an overview of a 2002 done by Purvin & Gertz, it is stated:
"Over the next decade, substantial growth in bitumen production is planned. In the current absence of new refinery developments to process more heavy crude, there are strong concerns that heavy oil supplies will exceed the market capacity, with a resulting impact on heavy oil prices that could jeopardize further heavy oil developments. New synthetic crude projects are also planned, resulting in new supplies entering the market. Thus, there are serious
concerns regarding the capabilities of the market to absorb all of the planned production of heavy oil and synthetic crude."
So Canada's tar sands are not like to save the day in the near future. However, there are environmental problems both with extracting and refining tar sands, and with the refining of sour crude. This involves the broad use of sulfuric and hydrofluoric acid. The above article also notes that the availability of sweet crude is declining.
Sweet crude appears to also be in decline. In an October 7, 2004 article in Business Day, it is noted that most of the sweet crude available is actually "sweet sour" crude (certainly not a good sign), and that there is a lack of refineries for processing the oil. The article quotes the Saudi Oil Minister - "We have 500,000 barrels a day extra capacity and we are ready to produce now but there are no buyers." The IEA "warned that there was a “mismatch” between the oil that can be produced cheaply and what refiners can process.
“The net effect is that light sweet crude is in short supply, and prices for these grades are rising." The ongoing shortage of sweet crude is intensifying the competition for Nigeria's oil with hundreds of firms scrambling for a piece of the well.
Beyond the fact that there is a deficit of refineries to process sour crude, and the environmental issues in that processing, is th problem that less gasoline is produced from sour crude. It appears, that the heavier the crude, the lower the gasoline extractions. It is noted in a 2/03/05 Forbes article:
"A barrel of Venezuelan heavy crude yields about 65% finished products such as gasoline and aviation fuel, compared with 95% for the lightest Saudi crude. But, getting that 65% requires some very expensive and complex refining equipment--exactly what Venezuela has installed at its refineries in Corpus Christi, Tex, Houston. and Lake Charles, La."
That is a 30% difference in processing, which means that 30% more heavy crude would need to be pumped to get the same amount of gasoline as sweet crude. It also means that there is a lot of waste in this process. They state in the Forbes article that the excess crude is turned into asphalt if it does not receive complex processing. Do we really need that much asphalt?
The more I try to track down the implications of peak oil and heavy crude, the more "tidbits" surface for consideration.
Posted by Rowan at August 26, 2005 7:51 AM Category: Peak Oil