Chemical Engineering May 2013 - 17

Cover Story
PETROLEUM
REFINING
OUTLOOK
Petroleum from shale and oil sands
offers opportunities for North American refiners,
but the shifting crude diet also presents challenges,
as refiners look to match product output with demand
ncreasing production of crude oil
from shale deposits in the U.S. and
oil sands in Canada offers North
American petroleum refiners opportunities
to access cost-advantaged
feedstock. However, shifting product
demand and hurdles in transportation
logistics, along with technical issues
associated with the properties of
the crude from those areas, present
challenges as refiners optimize their
product mix. Crude oil from shale
was among the many refining-related
trends and issues discussed at the recent
annual meeting of the American
Fuel and Petrochemical Manufacturers
(AFPM; Washington, D.C.; www.
afpm.org) in San Antonio, Tex.
At a press conference to open the
meeting, AFPM president Charles
Drevna emphasized the potential
presented by increased development
of hydrocarbons from shale deposits.
" There's tremendous opportunity for
the nation right now, not just for refiners, "
he said. " We're at the proverbial
fork in the road, where decisions
have to be made for the future. These
decisions will determine the course of
the 'manufacturing renaissance' in the
U.S. " Pointing out the importance of
policy decisions in the near future, he
said, " There's a window of opportunity
now, but it won't last forever. "
I
Tight-oil tidal wave
Hydraulic fracturing of shale deposits
has been widely associated with natural
gas production in the recent past,
but a large price differential between
gas and crude oil has driven producers
in the oil-and-gas industry to apply
horizontal drilling, hydraulic fracturing
and other modern extraction technologies
to areas containing so-called
" tight oil, " referring to crude oil that
resides in low-permeability geologic
formations, such as shale deposits.
A number of speakers discussed
the increasing tight-oil production
at the AFPM meeting, including Michael
Wojciechowski, an economist
with Wood Mackenzie (Edinburgh,
U.K.; www.woodmac.com), who called
the increase " a tight-oil tidal wave "
(Figure 1).
Praveen Gunneseelan, of Vantage
Point Advisors (Houston; www.vantageptllc.com)
says that production of
tight oil in the U.S. is projected to grow
1,000
500
2,500
2,000
1,500
FIGURE 1. Tight oil in the U.S. represents the largest share of the increased petroleum
production, and of non-OPEC production increases
Source: Wood Mackenzie
from the current 1.5 million barrels
per day (bbl/d) to between 2.8 and 4.2
million bbl/d by 2025, before declining
to 2 million bbl/d by 2040 (Figure 2).
Further, tight oil production will account
for between 20 and 40% of total
U.S. oil production through 2040 and
will comprise a significant portion of
the crude slate for U.S. petroleum refineries.
The majority of this surge in
tight-oil crude will be refined domestically,
Guneseelan says.
The International Energy Agency
(Paris; www.iea.org) says that crude
oil from shale could allow the U.S. to
produce as much as 11 million bbl/d
overall by 2020, which would push the
U.S. past Saudi Arabia as the world's
largest oil producer.
The major production areas for
tight oil, and those where much of the
production growth will occur, are the
Williston Basin in North Dakota and
Montana, which contains the Bakken
formation, and the Western Gulf
CHEMICAL ENGINEERING WWW.CHE.COM MAY 2013 17
Azerbaijan
Ghana
South Sudan
Malaysia
Syria
Biofuels (global)
Kazakhstan
Canada
Brazil
U.S.
Oil sands
Tight Oils
2012-2016 production increase (in thousands of bbl/d)
http://www.afpm.org http://www.iea.org http://www.woodmac.com http://www.van http://www.tageptllc.com http://WWW.CHE.COM
Chemical Engineering May 2013

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