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   Issue 5/6, Winter 2005/Spring 2006

Oil & Gas Refining

Refining Process     Print Resources    
Internet Resources     LC Catalog Searches

In contrast to the oil and gas extraction services industry, which is very fragmented, the oil and gas refining industry is dominated by only a few large corporations. The largest oil company is Exxon Mobil, with British Petroleum at 2nd, followed by Royal Dutch/Shell as the 3rd largest. These oil companies in particular, are considered 'integrated' oil corporations meaning they operate in all factors of production, refining and marketing.1 Oil and gas refining is a highly capital-intensive industry and because of the large amount of capital investment required, there are very few companies or competitors within the industry.

Oil and gas refineries are widely distributed and usually located close to the markets where petroleum products are consumed. Global energy data regarding petroleum production shows that world oil refining capacity has steadily grown over the past decade, reaching over 88,004 thousand barrels per day in 2012.2 This number has remained somewhat static over the recent years. However, looking back the numbers have grown: 3
2000 - 81,529 (Thousand Barrels Per Cal Day)
1990 - 70,563 (Thousand Barrels Per Cal Day)
1980 - 76,783 (Thousand Barrels Per Cal Day)
1970 - 46,765 (Thousand Barrels Per Cal Day)

In the U.S. there are approximately 143 crude oil refineries and this number is way down from the high in the 1950's and down from the early 1980's when there were about 300. 4 Outside of the United States the big players are China and Russia. China's industry, dominated by Sinopec and CNPC, is experiencing change in order to increase capacity by shutting down many smaller refineries, building new/bigger refineries, and expanding its downstream presence. 4a The numbers for Russia have remained somewhat stable at 40 refineries. 4b The U.S. has the largest number of refineries (132) followed by China at 95, and Russia at around 45 refineries. As mentioned previously, the world's total refining production capacity is estimated at 82 million barrels per calendar day.

BERA - Business & Economics Research Advisor - A Quarterly Guide to Business & Economics Topics

Issue 5/6: Winter 2005/Spring 2006
Updated July 2013

The Oil & Gas Industry

Table of Contents

Introduction
History
Cartels & Organizations
Production
Refining
Transportation & Storage
Marketing & Distribution
Natural Gas Industry Trends
Alternative Energy Sources
Company Research
Statistical Sources
News & Analysis
Electronic Resources & Catalog Searches

Drilling Rig Near Sable Island
Image (above): Photograph of
drilling rig near Sable Island.
Courtesy of the Maritimes Region of the Department of Fisheries and Oceans, Canada.

In observing the top countries in refining capacity, in 2012 the U.S. has the largest refining capacity totaling 17,726 thousand barrels per day, Russia's refining capacity is at 5,431 thousand barrels per day, Japan at 4,730 thousand, India at 4,043 thousand per day, and China at 6,866 thousand barrels per day.5 However, refining capacity is not the actual indicator of oil production in the number of barrels produced per day. In 2011 Saudi Arabia is actually the world's largest oil producer, producing 11,154 thousand barrels per day, following by Russia which produces 10,239 thousand barrels per day, followed by the United States producing 10,136 thousand barrels per day. 6

The world's first oil refinery was constructed in Ploesti, Romania in 1856.7   Several more refineries were eventually built at this location with significant investment from the U.S. before the refineries were taken over by Nazi Germany during World War II. Most of these refineries were destroyed in the second World War.

Currently, the world's largest oil refinery is located in Ras Tanura, Saudi Arabia. This refinery is owned and operated by Saudi Aramco. Prior to the establishment of the Ras Tanura refinery, the world's largest refinery was Abadan located in the southeastern region of Iran.

The Refining Process

As with much of the oil and gas industry, modern day refining operations are composed of very sophisticated and complex processes. These processes are used to convert crude oil into commercially consumable fuel used for transportation and are to be produced as economically and environmentally sensitive as possible. Refineries and processing plants transport fuel to large commercial customers which include power plants, chemical factories, and airports.8 Petroleum products such as gasoline, diesel fuel and home heating oil are not directly sent to consumers. These petroleum products are transported by pipeline or barge from the refinery to a terminal or plant, where it is temporarily stored in large tanks. The fuel is then shipped by truck railroad or ships9 to distributors and service stations.

According to the American Petroleum Institute (API), there are an estimated 157,393 gasoline service stations within the U.S.10 API studies also indicate that 40 different types of gasoline are made by refineries, with 90% of gasoline produced by the U.S. being used in automobiles.11 In addition to providing gasoline services, U.S. service stations also purchase over 240 million gallons of used oil for consumers, which is used to produce motor oil.

The refining process is where crude oil is purified and stored. The tall towers associated with refineries, are called fractionating columns and are where crude oil is heated and boiled. However, refineries produce many different commercial products in various industries. The lightest liquefied petroleum gas fractions (propane and butane) created from the heating process are used to make plastics, fabrics, and a variety of other consumer products, as well as gasoline, kerosene and diesel fuel.12 The heavier fractions of liquefied gas are used as home heating oil, and fuel for ships and factories. The heaviest fractions are used to make lubricants and waxes.

Each refinery has its own and unique processing scheme which is determined by the processing equipment available.13 The different characteristics of crude oil, operating cost and product demand are all elements that affect refinery processing. The production capacity of each refinery is controlled by economic factors and no two refineries are the same in their production operations. The specific processing conducted in refineries and the end product units are depicted in the following summaries:14

Refinery Process Units                 Specialized End Product Units

Refinery Process Units

  • Atmospheric Distillation (distills crude oil into fractions)
  • Vacuum Distillation Unit (further distills residuals after atmospheric distillation)
  • Naphtha Hydrotreater Unit (desulfurizes naphtha from atmospheric distillation)
  • Catalytic Reformer Unit (uses hydrogen to break long hydrocarbons into lighter elements which are added to the distiller feedstock)
  • Distillate Hydrotreater Unit (desulfurizes distillate (diesel) after atmospheric distillation)
  • Fluid Catalytic Converter Unit
  • Dimerization Unit
  • Isomerization Unit
  • Gas storage units for propane and similar gas fuels, (spherical storage units)
  • Storage tanks for crude oil and finished products, (cylindrical storage units)


Specialized End Product Units

  • Gaseous fuels such as propane, stored and shipped in liquid form (used in making plastics, fabrics and other materials
  • Liquid fuel blending (producing automotive and aviation grades of gasoline, kerosene, aviation turbine fuel, diesel fuels, dyes, detergents,and oxygenates)
  • Lubricants (produces light machine oils, motor oils, and greases)
  • Wax (used in packaging frozen foods and other consumer products)
  • Sulfuric acid finishing and shipping (used as an industrial material, such as oleum)
  • Tar (used in gravel and gravel roofing)
  • Asphalt (for bulk asphalt shipping)
  • Asphalt concrete (mix used for road surfacing)

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Selected Print Resources

The literature listed in this section covers research on oil refineries and the refining process. This material looks at a wide array of subjects, issues and concepts related to oil and gas refineries and refining.

Abdel-Aal, Hussein K. Petroleum and Gas Field Processing. New York: Marcel Dekker, c2003. 364 p.
LC Call Number: TP690 .A23 2003
LC Catalog Record: 2003266688

The immediate product extracted from oil and gas wells consists of mixtures of oil, gas, and water that is difficult to transport, requiring a certain amount of field processing. The book covers oil and gas composition, two-and three-phase separation, and treatment of produced fluids. A separate section is devoted to natural gas. Annotation by Book News, Inc.

Gary, James H. Petroleum Refining: Technology and Economics. 5th ed. Boca Raton : CRC Press, c2007.
LC Call Number: TP690 .G33 2007
LC Catalog Record: 2006027841
Table of contents Publisher description

A useful publication, which systematically examines the basic aspects of current petroleum-refining technology and economics. Intended to be used as a ready reference source for technical managers, engineers, university faculty, graduate and senior level undergraduate students.

Inkpen, Andrew and Michael H. Moffett. The Global Oil & Gas Industry : Management, Strategy & Finance. Tulsa, Okla. : PennWell, c2011.
LC Call Number: HD62.4 .I515 2011
LC Catalog Record: 2011006878
Table of Contents

Meyers, Robert A. Handbook of Petroleum Refining Processes .3rd edition. New York: McGraw Hill, c2004.
LC Call Number: TP690.H34
LC Catalog Record: 2003051175

A compendium of global refining, licensable technologies for the refining of petroleum and production of environmentally acceptable fuels and petrochemical intermediates.

Parkash, Surinder. Refining Processes Handbook. Amsterdam; Boston: Gulf Professional Pub., c2003. 712 p.
LC Call Number: TP690 .P247 2003
LC Catalog Record: 2003536599

Besides covering topics like catalytic cracking, hydrocracking, and alkylation, this volume has chapters on waste water treatment and the economics of managing or commissioning the design of a petroleum refinery. Found only in this volume is material on operating a jointly owned and operated refinery. (Over the last decade, the ownership of many refineries has shifted to small companies from the large, integrated companies. Because of this shift, many refineries are now jointly owned and operated.) This book gives readers a comprehensive introduction to petroleum refining, as well as a full reference to engineers in the field.

Peterson, D.J. and Mahnovski, Sergej. New Forces at Work in Refining: Industry Views of Critical Business and Operation Trends. Santa Monica, CA: RAND, 2003. 115 p.
LC Call Number: HD9565.P349
LC Catalog Record: 2003013082
Table of Contents
Publisher Description External Link

Reports of discussions with representatives refining firms, technologies and service providers, research institutions, and other organizations on current and future trends in the U.S. refining industry.

Refining Statistics Sourcebook. Tulsa, OK: PennWell Pub Co. Annual. 1994 to present.
LC Call Number: HD9560.1 .R44
LC Catalog Record: 94640976

Provides figures on petroleum product demand, capacity and inputs, refining production, imports and exports, stocks of crude oil and petroleum products, transportation and petroleum movement, investment and margins, prices and demand.

Speight, J.G. Petroleum Refining Processes. New York: Marcel Dekker, c2002. 706 p.
LC Call Number: TP690 .S744 2002
LC Catalog Record: 2002283768

Written by two chemical engineers, this reference for petroleum engineers and scientists summarizes recent technological advances in the refinement of heavy oils, bitumen, and other high-sulfur feedstocks into lower-boiling products. A sampling of topics includes the evaluation of native materials, the availability of natural gas reserves, chemical kinetics, reactor design, thermal cracking, and hydrogen production. Conversion tables and an extensive glossary of terms are provided in the appendix. Annotation by Book News, Inc.

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Selected Internet Resources

2002 Economic Census Industry Series Report - Industry Statistics Sampler: Petroleum Refineries, NAICS 324110. U.S. Census Bureau
http://www.census.gov/econ/isp/sampler.php?naicscode=324110&naicslevel=6

This web page provides industry classification information and statistics, geographic distribution information on U.S. refineries, provides access to the 2002 Economic Census Industry Report and other useful Economic Census data.

All About Petroleum - From Refinery To You. American Petroleum Institute (API)
http://classroom-energy.org/oil_natural_gas/progress_through_petroleum/petroleum/aboutpetroleum07.html External Link

This section of API's "All About Petroleum" homepage, provides a basic overview from the industry perspective of the establishment of the first oil pipelines in the U.S., the transportation of oil to refineries, and its subsequent shipment to major commercial customers, such as power plants and factories, as well as to distributors and service stations.

The Industry Handbook - Oil Services Industry. Investopedia.com
http://www.investopedia.com/features/industryhandbook/oil_services.asp External Link

A useful reference that provides a concise and thorough overview of the oil services industry. The site includes information on oil and drilling services, oil refining, key/ratio and terms, as well as an analyst insight section and other links.

Kumins, Lawrence and Bamberger, Robert Gasoline Price Surge Revisited: Crude Oil and Refinery Issues CRS Report for Congress. April 8, 2004.
http://fpc.state.gov/documents/organization/33168.pdf External Link
All versions of this document are available via the Open CRS web site.

The report provides an analysis on gasoline price increases and crude oil and refinery issues. The report also discusses the influences of supply and demand on gas prices, gasoline supply--U.S. production and imports, crude oil inventory, as well as other important factors affecting gasoline prices.

News Directory for the Oil and Gas Industry - Refining. Oil.com
http://www.oilnews.com/s/oilcom/left_refining.html External Link

An online news and directory web site, which provides news and information on oil refining. Also included on the site is a directory of energy companies, petroleum product manufacturers, and other petrochemical and trading companies

"Refineries return after Katrina," BBC News. September 6, 2005.
http://news.bbc.co.uk/1/hi/business/4217950.stm External Link

This article looks at the effects of Hurricane Katrina on U.S. Gulf Coast refineries, by discussing the issues of emergency supplies and the effects of temporary refinery closings on the U.S. oil and gas industry

Refining Online
http://www.refiningonline.com/ External Link

A web-based information service for the petroleum refining industry.

Topics for Natural Gas Storage. U.S. Dept. of Energy. Energy Information Administration (EIA).
http://tonto.eia.doe.gov/dnav/ng/ng_stor_top.asp

An EIA web page that provides a number of links and information sources on topics related to natural gas storage. Also available on this web page are featured reports, data on underground storage facilities, and a section with access to reports and analysis consisting of weekly, monthly annual reports with data-analysis on natural gas topics. Articles, publications and presentations providing analysis on natural gas storage are also available

Petroleum Refining and Processing Topics. U.S. Dept. of Energy. Energy Information Administration (EIA).
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_top.asp

This Internet site provides weekly, monthly and annual data on U.S. refineries, links to subject related publications and analysis, as well as other related topics on refining.

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Library of Congress Catalog Searches

Additional works on oil and gas refining in the Library of Congress may be identified by searching the Online Catalog under appropriate Library of Congress subject headings. Choose the topics you wish to search from the following list to link directly to the Catalog and automatically execute a search for the subject selected. Please be aware that during periods of heavy use you may encounter delays in accessing the catalog. Please see the individual sections of this guide for catalog searches relating to those topics. For assistance in locating the many other subject headings which relate to this subject, please consult a reference librarian.


 1. The Industry Handbook - The Oil Services Industry. Investopeida.com
http://www.investopedia.com/features/industryhandbook/oil_services.asp External Link Accessed July 2, 2013.

 2. Other International Petroleum (Oil) Data. Capacity -Crude Oil Distillation Capacity - world. U.S. Energy Information Administration.
http://www.eia.gov/emeu/international/oilother.html Accessed July 2, 2013.

 3. Ibid.

 4. Table 1 - "Number and Capacity of Operable Petroleum Refineries by PAD District and State as of January 1, 2013".http://www.eia.gov/petroleum/refinerycapacity/ Accessed July 2, 2013.

 4a. China. U.S. Energy Information Administration.
http://www.eia.gov/countries/cab.cfm?fips=CH Accessed July 2, 2013.

 4b. Russia. U.S. Energy Information Administration.
http://www.eia.gov/countries/cab.cfm?fips=RS Accessed July 2, 2013.

 5. International Energy Statistics, U.S. Energy Information Administration http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=5&pid=72&aid=7 Accessed July 2, 2013.

 6. Data by country, U.S. Energy Information Administration
http://www.eia.gov/emeu/international/oilother.html Accessed July 2, 2013.

 7. Oil Refinery. Wikipedia.
http://en.wikipedia.org/wiki/Oil_refinery External Link Accessed July 2, 2013.

 8. All About Petroleum - From Refinery To You. American Petroleum Institute.
http://classroom-energy.org/oil_natural_gas/progress_through_petroleum/petroleum/aboutpetroleum07.html External Link Accessed July 2, 2013.

 9. Ibid.

 10. Service Station FAQs. American Petroleum Institute.
http://www.api.org/oil-and-natural-gas-overview/consumer-information/service-station-faqs External Link Accessed July 2, 2013.

 11. Gary, James H. and Handwerk, Glenn E. Petroleum Refining: Technology and Economics. 4th ed. New York: Marcel Dekker, Inc., p. 9.

 12. All About Petroleum - From Refinery To You. American Petroleum Institute.
http://classroom-energy.org/oil_natural_gas/progress_through_petroleum/petroleum/aboutpetroleum07.html External Link Accessed July 2, 2013.

 13. Gary, James H. and Handwerk, Glenn E. Petroleum Refining: Technology and Economics. 4th ed. New York: Marcel Dekker, Inc., p. 4.

 14. Oil Refinery. Wikipedia.
http://en.wikipedia.org/wiki/Oil_refinery External Link

Last Updated: 07/23/2013

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