So, What About Oil Refining?

You may have seen an oil refining facility while driving along the highway. Was it dark even during the day, with lights and strange noises? Were there enumerable pipes of all sizes running here and there? Did you see plumes of white and gray smoke billowing from numerous short and tall stacks, and eternal flames lighting up the evening sky?

By day it is a mysterious collection of odd-shaped pressure vessels and storage tanks – some large, some short; some narrow, others wide. At night, with the vessel shapes somewhat obscured by the escaping steam and the amber safety lights, the refinery at a distance can be easily confused for a small city more than the industrial facility it is.

It is a vital element of the oil industry, creating the refined products that are the foundation of state economies. But how does it work, and what is the controversy all about?

Well, let’s deal with the controversy first...

The process of refining oil is complex. High temperatures and various techniques and chemicals are required to safely refine oil into the products that society requires.

As a consequence of refining the oil, numerous chemicals can be released into the atmosphere in a gaseous state, creating potential air pollution impacts.

Who wants to live next door to a refinery? Who wants their kids going to school downwind of the constantly emitting smoke stacks? Who would rather see the amber glow from the neighboring refinery than the evening stars? Clearly, the answer in each case is few. But, it is this negative perception of the refining industry that is its own impediment.

The truth is, technologies have improved, but no new refineries have been built in the U.S. for thirty years!

Why? Because it is nearly impossible for businesses to navigate the political/social/regulatory gauntlet to finally gain permission to build a new refinery and economically refine oil.

Renovations, and retrofits also present problems to industry as the act of retiring antiquated equipment and processes trigger requirements to adhere to current permitting rules and standards that are in some cases, impossible for the pre-1970 technology refineries to meet. So, the aged refineries remain in place, continuing to serve their intended functions, but unable to change their dirty images.

The other area of controversy stems from the scheduled shutdowns and its impact on supply and fuel costs. It is much easier to believe that industry executives with sinister motives are negatively impacting supply and driving up costs than to accept the fact that old-fashioned refineries require constant attention and maintenance to operate effectively.

Due to the fact that there are so few of them, every shutdown of an oil refinery - scheduled or not - has a ripple effect on supply.

So, how do refineries work anyway?

Refineries exist to process hydrocarbon delivered from oil fields into various blends and products to meet market demand. The odd-shaped vessels and auxiliary equipment are vital for refining oil – separating elements of crude oil into purer components for consumer use.

The process of separation actually begins miles if not continents away from the refineries. As oil, gas and water are produced from a well, the well fluids are routed through metal pipelines from the well to production gathering facilities located within the oil field leases.

The primary functions of production facilities are to separate the water from the hydrocarbon, and to separate the hydrocarbon into products that meet required specifications for transfer and sale. For efficiency reasons, the production facilities are sized to accommodate concurrent production from several wells and contain several tanks designed to assist in separation and storage of the various fluids (gas, oil and water).

Fluid volumes, temperatures and pressures are measured by flow meters and gauges placed throughout the process. The operator and engineers can determine individual well performance by operating wells in production test mode. This is vital for confirming reservoir conditions and forecasting future production. If a well’s production performance deviates from expected volumes, some malfunction may have occurred, requiring immediate attention by company and oil field services specialists.

Most facilities utilize inherent fluid properties to separate them from each other. Gas will rise above liquids; most oils will float on water. The production facility, then, captures the fluids through gravity separation.

Produced water, unfit for human consumption, is processed to strip residual hydrocarbon and is typically re-injected into the producing formation for reservoir pressure support, or injected into some barren formation for disposal. Associated gas, uneconomic for sale, is usually routed to a flare and consumed.

Gas that is marketable is compressed and stored in pressure vessels until transferred most likely in pipelines to market. Oil is trucked or piped in the most economical means to refineries for further processing. Tanker ships also play a vital role in meeting global gas and oil demands.

Once delivered to the refinery, crude oil is heated in pressure vessels to temperatures in excess of 1000 degrees Fahrenheit. As the temperature rises, different components of the oil begin to separate from the remaining crude – first the light hydrocarbons precipitate out, then the heavier ones.

This process of refining hydrocarbon is called distillation, and it is the primary method for obtaining refined liquid petroleum gases (LPGs, butane and lighter), light straight naptha (gasoline), kerosene (jet fuel), distillates (diesel fuel and home heating oil), and heavy gas oil and residuum (used in catalytic cracking and coking).

As the lighter distilled products are consumed most in the U.S., heavy gas oil and residuum are commonly further refined in a process called catalytic cracking to produce more lighter, high-valued product. Based upon the sophistication of the individual refinery, a barrel of crude oil can provide 20-60% gasoline product.

For environmental reasons, the federal government, various states and regions within the states have established different requirements on the quality/characteristics/contents of gasoline sold in their areas of jurisdiction. The requirements help the regulatory agencies meet mandated air quality goals.

However, the consequence of these requirements is the limited use of various and available blends of gasoline in times of short supply.


Go to Oil Company Contacts Go to Oil Prices