OIL REFINING FEASIBILITY
M. King Hubbert oil production peak curve

1. World oil production was fast increasing during past decades and is reaching its maximum now. It will start decreasing soon and the decrease will be of 50 % within about 30 years: as a consequence, world refining over-capacity will increase fast. A conventional oil refinery is an expensive industrial project with long term pay-out: commonly 15 years. Future world oil refining capacity decrease following the production decrease is not in favour of new conventional refineries projects. More flexible skid units with short term pay-out either associated to distribution plant or located at production site should be more adapted.

 

Oil reserves per geographical zone

2. World oil reserves available for export in the future are mostly located in the Middle East. As consequence, large refining possible new projects or expansions or revamping projects will mostly be justified there.

 

World oil demand forecast

3. World oil demand increase facing a decreasing oil production will create tensions. To decrease the gap, barrel's cost will increase and a lot of small oil fields will start production, often in landlocked areas. The profitability of small oil fields is well known in United States already for a long time.

 

Grass-roots refinery infrastructure

4. World oil products distribution network is covering all countries without considering neither their development level nor their ability to produce crude oil: oil products distribution infrastructure is present everywhere, all over the world. Associating process units to such existing infrastructure devides the conventional refining investment by 3 .

 

Transport cost importance in oil products economics

5. World crude and oil products transport is very important. For landlocked areas, exported crude value is an international reference crude barrel cost minus transport cost and imported oil product cost is an international reference product cost plus transport cost. The transport cost may be so heavy that the crude oil producer may have to sell about 2 barrels of crude to buy the refined oil products of only 1 barrel !

 

oil refining profitability on production site or distribution plant

6. World development of small oil fields in the near future as was the case in USA during recent past means a lot of profitable situations for production and distribution companies associating new process units to existing infrastructure.

 

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