Residual Oil Cracking in the New World of Petroleum Refining
Publication Date: 2012-Jun-07
The IP.com Prior Art Database
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RESIDUAL OIL CRACKING
THE NEW WORLD OF PETROLEUM REFINING
R. E. WRENCH
Technology Manager Catalytic Cracking Technology
J. Wo WILSON
THE M. W. KELLOGG COMPANY Houskon, Texas
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or with the petroleum refining industry know times. An examination of the prices of
products over the past several years shows the source of profit for refining, has
in general has declined. Recent t~ends have how rapidly prices can change.
Despite a reduction in world wide refining capacity, price differ- entials have not improved. Obviously we have entered a new world of petroleum refining.
To understand this new world, we must first review the past. From the 1950's until the 1960's the oil industry consisted primarily of seven major and a few smaller independent oil companies. These companies were engaged in all aspects of the oil business. (I) Trading was limited to a few independent traders and brokers. These had little effect on the world market.
In 1973, all this began to change. Producer countries, specifi- cally OPEC, gained control of the price of crude. Much of the world crude supply was nationalized by producer nations forcing the large oil companies to purchase crude at official prices. At the same time an independent spot market in crude oil emerged.
In 1979, the Iranian Revolution produced a worldwide crude shor- tage. Spot crude prices were pushed well above official prices.
Spot product prices also increased due to real or imagined shortages.
In response to the rapid run up of prices on the spot market, oil companies became traders. Crude oil and refined products became commodities with prices vulnerable to changes in supply and demand.
in today,s world, the spot markets and the forward or futures
markets play an important role in setting the price of crude oil and refined products. These markets are generally considered to
All of us who work in that these are trying crude oil a~d refined that the differential, fluctuated widely but underscored just
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be efficient. That is, these markets will respond rapidly to changes in supply and demand. The market price in an efficient market will always reflect the value of the commodity to the mar- ginally satisfied user.
Stripped of economic jargon, this says that in order to profitably refine crude oil you must be able to extract more value per barrel than the majority of other refiners. This, in a nutshell, is the new world of petroleum refining.
The refiners who survive and even prosper in this new world will have the following attributes: low crude cost per barrel of pro- duct and flexibility to adapt quickly to changing markets. These requirements can be met by the addition of heavy oil cracking to an existing refinery. In a refinery with an existing fluid catalytic cracking unit, this can be accomplished by a low cost revamp. This revamp can often be done during a regular .scheduled turnaround. For refiners which do not currently have a...