Author Topic: America Is Producing the Wrong Kind of Oil  (Read 1178 times)

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Offline thackney

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America Is Producing the Wrong Kind of Oil
« on: February 01, 2019, 03:46:48 pm »
America Is Producing the Wrong Kind of Oil
https://www.bloomberg.com/news/articles/2019-02-01/the-great-oil-paradox-too-many-good-crudes-not-enough-bad-ones

The shale boom has created a world awash with crude, putting a lid on prices and markedly reducing U.S. dependence on imported energy. But there’s a growing problem: America is producing the wrong kind of oil.

Texas and other shale-rich states are spewing a gusher of high-quality crude -- light-sweet in the industry parlance -- feeding a growing glut that’s bending the global oil industry out of shape.

Refiners who invested billions to turn a profit from processing cheap low-quality crude are paying unheard of premiums to find the heavy-sour grades they need. The mismatch is better news for OPEC producers like Iraq and Saudi Arabia, who don’t produce much light-sweet, but pump plenty of the dirtier stuff.

The crisis is Venezuela, together with OPEC output cuts, will exacerbate the mismatch. The South American producer exports some of the world’s heaviest oil and Trump administration sanctions announced this week will make processing and exporting crude far more difficult. American refiners are scrambling for alternative supplies at very short notice.

"We still have some holes in our supply plan" over the next 30 days, Gary Simmons, a senior executive at Valero Energy Corp., the largest refiner in the U.S., told investors on Thursday. "We are not taking anything from Venezuela."

Crude isn’t the same everywhere: the kind pumped from the shale wells of West Texas resembles cooking oil -- thin and easy to refine. In Venezuela’s Orinoco region, it looks more like marmalade, thick and hard to process. Density isn’t the only difference -- the sulfur content is also important, dividing the market into sweet and sour crude. Heavy crude tends to have more sulfur than light crude....
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Offline Smokin Joe

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Re: America Is Producing the Wrong Kind of Oil
« Reply #1 on: February 01, 2019, 03:51:15 pm »
I thought Athabascan Tar Sands bitumen was supposed to be the replacement for the Venezuelan crude at the refineries, but the pipeline has been held up for over a decade.
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Offline thackney

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Re: America Is Producing the Wrong Kind of Oil
« Reply #2 on: February 01, 2019, 03:56:03 pm »
I thought Athabascan Tar Sands bitumen was supposed to be the replacement for the Venezuelan crude at the refineries, but the pipeline has been held up for over a decade.

Exactly, several pipelines delayed has put Canada in such a transportation shortage they had to cut back on production.

https://www.cbc.ca/news/canada/calgary/suncor-mandatory-cuts-oil-oilsands-guidance-production-alberta-1.4946167
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Offline IsailedawayfromFR

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Re: America Is Producing the Wrong Kind of Oil
« Reply #3 on: February 01, 2019, 09:44:19 pm »
Light sweet crude is the most desirable, always.

Any problems currently experienced are temporary in nature and will be worked out in short order.

Refining has been on a roll for the last several years and is doing fine.

They are disheartened their investments in handling heavy sour crude are not nearly as lucrative as they once were.
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