Anyone wanna buy a refinery?

[Okla-homey]

Biz section of the Tulsa World reports Valero wants to sell its refinery in Ardmore. Also the ones it owns in Lima, OH and Aruba.

Apparently, the Ardmore refinery (90K bbls per day) is incapable of processing hi-sulphur crude. Valero wants to be capable of processing that crap because the profit-margin is better (IOW, I assume since hi-sulphur crude is cheaper to buy, the gasoline product is more profitable)

Question(s) for the resident oil-patch trash:

Is gas made from hi-sulphur crude of lower quality? Does it make your exhaust smell like a fart?

[royalfan5]

Is that the one that was down for a spell this spring?

[Okla-homey]

Is that the one that was down for a spell this spring?

I don't know, but I don't remember the Ard Vegas refinery being closed. Maybe.

[1stTimeCaller]

it was down for a week or so not too long ago. My neighbor works there.

[1stTimeCaller]

TheHumanAlphabet would be the expert on the gasoline question but I would assume the gasoline would be the same.

[olevetonahill]

If you hadnt canceled that Ccard . you coulda bot it and gave us free gas . Ya slouch

[TheHumanAlphabet]

Question(s) for the resident oil-patch trash:

Is gas made from hi-sulphur crude of lower quality? Does it make your exhaust smell like a fart?

Someone call??? ;)

Answer = higher margin, same quality fuel, more money. Refineries that process high sulphur fuel invest a lot on sulphur removal techonology. I believe sulphur in the fuel would damage an engine, but I'm no ChemE or Chemist. Our plant in Baytown has invested heavily in sulphur removal and we pretty much only process sour crude. It makes more money, then you have tons of sulphur to sell to the fertilizer companies and all the end products have more margin value and make more money.

[oumartin]

All fuel as got to be low sulfur below 15ppm or something within the next few years. All refineries have a certain time in which to get into compliance.
Are you sure they want a higher grade fuel or lower grade sulfur?
In order to remove excess sulfur you have to incinerate it in a clause unit and often time is down by an outside company. I.E. (Tessenderlo Kerley)

Companies like Tessenderlo Kerley get paid huge bucks by refineries to Turn said H2S and sour water gas into a profitable commodity. You can make molten sulfur which is used in shooting pigeons and acids.(sulfuric acid).
They also Incinerate the Sulfur and add Oxygen and sent that to a tail gas unit that can in turn turn the tail gas into a liquid fertilizer. Tessenderlo Kerley makes Potassium Thio-sulfate, Ammonium Thio Sulfate.

Its a big business so it would baffle me why a refinery would want higher Sulfur content
I have yet to see a refinery get paid for their H2S gas stream. They have to pay to get rid of it.

[Newbomb Turk]

a tail gas unit

I have one of those.

[en4cer]

How much... how much for the women and Ardmore unit.

http://upload.wikimedia.org/wikipedia/en/thumb/f/f5/BluesBrothers.jpg/220px-BluesBrothers.jpg

[bluedogok]

Is that the one that was down for a spell this spring?
If you are talking about the tank fires earlier this year, I think it was storage facility in Wynnewood.

[TheHumanAlphabet]

All fuel as got to be low sulfur below 15ppm or something within the next few years. All refineries have a certain time in which to get into compliance.
Are you sure they want a higher grade fuel or lower grade sulfur?
In order to remove excess sulfur you have to incinerate it in a clause unit and often time is down by an outside company. I.E. (Tessenderlo Kerley)

Companies like Tessenderlo Kerley get paid huge bucks by refineries to Turn said H2S and sour water gas into a profitable commodity. You can make molten sulfur which is used in shooting pigeons and acids.(sulfuric acid).
They also Incinerate the Sulfur and add Oxygen and sent that to a tail gas unit that can in turn turn the tail gas into a liquid fertilizer. Tessenderlo Kerley makes Potassium Thio-sulfate, Ammonium Thio Sulfate.

Its a big business so it would baffle me why a refinery would want higher Sulfur content
I have yet to see a refinery get paid for their H2S gas stream. They have to pay to get rid of it.

Lower price of crude going in = More margin = more money. That's all I got.

[oumartin]

Now if higher sulfur content crude is lower cost to purchase and refine then so be it. But the massive amounts of money that refineries have had to spend on new technology to lower sulfur emisions and or the massive amounts of money they pay other companies to take their H2S and sour water gas streams to me would null that out.
I could be way off but having worked in the Sulfur recovery field for years that was my experience.
Who knows

[1stTimeCaller]

dang, I'm having trouble finding a price for a barrel of sour oil but this will help give an idea.


Worldwide, OPEC estimates that 45 % of refining capacity can use heavy sour oil. Refineries, for a hefty price, can be upgraded to handle heavy sour. Still, few expected in 2003 that refineries would soon have to scramble to find light crude.
Such a scramble occurred this year when OPEC took most of its surplus oil production out of mothballs to try to moderate rising oil prices and meet rising demand. Most of the added oil was medium and heavy sour, which did not help greatly in some regions. In Asia, for example, where China's growth is driving demand, OPEC estimates that only 30 % of refineries can process heavy sour oil.

So, light sweet crude such as West Texas Intermediate remained in relatively short supply, putting more pressure on the price. In contrast, plenty of sour crude was on the market, which triggered additional discounts for it. At one point this year, a barrel of Arab Gulf Dubai heavy sour crude produced in the United Arab Emirates was $ 18 less than a barrel of West Texas Intermediate, the US benchmark. As the price of light sweet crude has dropped, that gap has narrowed, and it dipped just below $ 13.
But the gap is farmore than is historically normal -- it was about $ 4 a year ago -- and OPEC has clearly been irked by accounts of record prices for Texas sweet crude while its members have gotten far less for their sour crude.


The wide difference between sweet and sour crude prices is important to most US refineries. Valero Energy, the country's third-largest refining company, in a recent filing with the Securities and Exchange Commission, said a "significant" percentage of the oil it used was sour crude, and the difference between sweet and sour crude prices affected its profitability.


Premcor, another US refining company, reported third-quarter earnings of $ 145 mm, dwarfing the $ 60 mm it made in the same quarter a year ago. Premcor singled out the use of sour crude for its contribution to those profits. "Margins have been enhanced by what appears to be a longer-term widening of the differential between light low-sulphur crude oil and heavy high-sulphur crude oil," Thomas O'Malley, the company's CEO, said.

It can cost hundreds of millions of dollars to upgrade a refinery to process heavy sour, but the current discounts for sour crude are making such investments look good. However, there are concerns that the costs of converting more US refineries will be much harder to recoup if the discounts return to levels of just a year or two ago. Hyatt, of the Cambridge Energy Research Associates, said the wider price spreads between light and heavy crude should last through at least next year. But any reduction in worldwide demand for oil or more supplies of light sweet crude, which may be possible from Russia and Africa, could cause the price spread to narrow.
"If that happens, the shift would not be permanent," he said.


If sour is $10/bbl cheaper than WTI and the Ardmore refinery could use it, it would save them $900,000/day. I have no idea what it costs to retrofit a refinery to be able to use sour oil but it looks like it wouldn't tale too long to pay for itself.

FYI the abbreviation for barrel is bbl. The extra 'b' stands for blue. 'Blue barrel of oil.' Back in the early days operators used any kind of container they could fine to put the oil in. Standard Oil used 42 gallon barrels and painted them blue. Their blue barrel of oil became the standard size.