Petroleum Production, Transportation, & Refining
John Jechura – jjechura@mines.edu
Updated: January 4, 2015
Topics
• Energy consumption & petroleum’s place
• Oil reserves
• Oil sources & production
• Pipelines
• Petroleum Refining
3
Energy Markets Are Interconnected
https://publicaffairs.llnl.gov/news/energy/energy.html
5
Petroleum Pathway
Crude Production
Crude Storage &
Transportation
Crude Transportation
Retail Distribution
Crude Refining
Consumer Use
6
Worldwide trade of refined products
• In general, United States prefers gasoline to diesel whereas the rest of the world prefers diesel to gasoline
 FCC‐based refineries will still produce a great deal of gasoline even when trying to maximize diesel production. Foreign incentive to ship excess gasoline to US, especially to the East Coast from Europe.
• 2008 gasoline imports suppressed the cost of gasoline relative to crude oil
 US refineries increasing the installation of Hydrocracking to produce diesel for export, especially along the Gulf of Mexico
Ref: Valero, UBS Global Oil and Gas Conference, May 21‐22, 2013
7
Oil Producing Locations
9
Proven Oil Reserves
10
Hubert’s Peak
11
Hubert’s Peak
12
Origins of Oil & Gas
• Organic life buried in sedimentary rock
• Transformation to hydrocarbons
• Migration from source rocks
• Accumulation of oil & gas
• Flow of oil & gas through porous media
14
Types of Oil Traps
http://www.maverickenergy.com/oilgas.htm
15
Characteristics of Reservoir Rock
Porosity
Permeability
http://www.maverickenergy.com/oilgas.htm
16
Oil Production
http://www.maverickenergy.com/oilgas.htm
17
Well Completions
Perforating
Acidizing
Fracturing
http://www.maverickenergy.com/oilgas.htm
18
Rotary Drilling Rig
http://www.britannica.com/EBchecked/topic‐art/1357080/113917/A‐land‐based‐rotary‐drilling‐rig
19
Beam Pumping Unit
http://www.britannica.com/EBchecked/topic‐art/37157/113919/The‐artificial‐lift‐of‐petroleum‐with‐a‐beam‐pumping‐unit
20
Directional & Horizontal Wells
• Directional drilling can get you to pay zones that you normally couldn’t reach
• Horizontal wells can expose a much greater drainage area – especially valuable in a tight reservoir
• Cost per well is 2X – 3X that of vertical well but productivity can be 15X – 20X. http://www.horizontaldrilling.org/
21
Unconventional Resources
• Petroleum & natural gas formed from decomposing organic matter in “source rock”
• Conventional – gas & liquids migrate through permeable rock toward the surface until it is stopped by some trapping mechanism
• Unconventional – gas & liquids are trapped at the source rock because of extremely low permeabilities
Dec. 5, 2012 update, http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm
22
What is hydraulic fracturing?
Source: ProPublica, http://www.propublica.org/special/hydraulic‐fracturing‐national
23
What is hydraulic fracturing?
http://c1wsolutions.wordpress.com/2014/07/30/a‐solution‐to‐frackings‐water‐problems/
24
Major tight‐oil production in U.S.
http://www.economist.com/news/united‐states/21596553‐benefits‐shale‐oil‐are‐bigger‐many‐americans‐realise‐policy‐has‐yet‐catch/
25
Canadian Oil Sands
• Heavy oils produced by various technologies
 Surface mining & hot water extraction
 In situ heating
• CSS (Cyclic Steam Stimulation)
• SAGD (Steam Assisted Gravity Drainage)
 Upgrading
• Exported product much lighter than feedstock
http://www.ogj.com/unconventional‐resources/oil‐sands.html
http://newenergyandfuel.com/http:/newenergyandfuel/com
/2009/08/12/making‐syncrude/
http://www.bp.com/sectiongenericarticle.do?catego
ryId=9036694&contentId=7067647
26
Oil Platforms
27
Deep Sea Production
28
Major U.S. Pipelines
30
Proposed Keystone Pipeline Expansion
• Keystone XL Pipeline important to bring oils sands & northern tight oil to Gulf Coast
• Section south from Cushing important to improve flow of all mid‐continent oil.  Started flow early 2014, up to 700,000 bpd capacity
http://www.washingtonpost.com/wp‐srv/special/nation/keystone‐xl‐map/
31
How Pipelines Work
Association of Oil Pipelines, http://www.aopl.org/aboutPipelines/?fa=howPipelinesWork
32
Batching in Product Pipelines
• Goal is to minimize product downgrade during shipping
• Preferred sequence to ship these products our of refinery:
• Considerations
 Interface between the two gasolines can be “downgraded” to the 87 octane (because of octane effects)
 Interface between the ULSD & Heating Oil can be downgraded to the Heating Oil (because of sulfur effects)
 Interface between 87 octane gasoline & ULSD have similar sulfur contents but different boiling point properties – typically returned to refinery for additional processing – “transmix”
RefinerLink, http://www.refinerlink.com/blog/Pipelines_Ship_Refinery_Products_to_Pump/
33
Louisiana Offshore Oil Port (LOOP)
http://blog.nola.com/tpmoney/2009/05/louisiana_offshore_oil_port_is.html
http://www.economicpopulist.org/content/gustav‐eying‐gulf‐oil‐and‐loop
34
Transportation Infrastructure is Key
• Keystone XL Pipeline important to bring oils sands & northern tight oil to Gulf Coast
 Section south from Cushing important to improve flow of all mid‐continent oil. Started flow early 2014, up to 700,000 bpd capacity
• Rail has become preferred method to bring incremental barrels out of Bakken & Eagle Ford
 Safety concerns – train derailments July 2013 Quebec (40 dead) & December 2013 ND  Concerns about increased emissions, especially in California
 ANSI & API released new recommended practices for shipping crude by rail (ANSI/API Recommended Practice 3000) in September 2014
• Available for free at this web page
http://www.washingtonpost.com/wp‐srv/special/nation/keystone‐
xl‐map/
http://www.cpr.ca/en/ship‐with‐cp/where‐you‐can‐ship/bakken‐
shale/Documents/bakken.pdf
35
Transportation by Rail in U.S.
Each rail car holds about 30,000 gal (714 bbls)
https://www.aar.org/keyissues/Documents/Background‐Papers/Crude‐oil‐by‐rail.pdf
http://peoriastation.blogpeoria.com/2012/03/24/b
nsf‐galesburg‐yards‐new‐tracks‐are‐in‐service/
36
What Does Tight Oil Mean for U.S. Refiners?
• Until Marketlink pipeline (southern leg of Keystone XL) operational expect prices for Mid Continent crude oils to be below market
 January 2014 expected to start shipments
• Tight oil production should ensure domestic supply to refineries needing sweet crude in the next 10 – 15 years
 Expected to peak @ 4.8 million bpd in 2021
(EIA, Dec. 2013)
• Recent investments to allow refiners to process heavy sour crudes might limit the ability to utilize tight oil
 Exporting tight oil while importing heavy oil is very possible if permitted by U.S. government
• Environmental concerns could put the brakes on this production
http://www.hydrocarbonprocessing.com/Article/3223
989/Channel/194955/Innovative‐solutions‐for‐
processing‐shale‐oils.html
 High energy requirements for producing Canadian oil sands
 High water quantities needed for tight oil & oil sands production
 Public concerns about hydraulic fracturing
 Public concerns about oil transport by rail
37
World & U.S. Refining Capacity
“Western Europe leads global refining contraction”, Oil & Gas Journal, pp 34‐48, Dec. 2, 2013
EIA, Jan. 1, 2014 database, published June 2014
http://www.eia.gov/petroleum/refinerycapacity/
39
Number & Capacity of World & U.S. Refineries “Western Europe leads global refining contraction”, Oil & Gas Journal, pp 34‐48, Dec. 2, 2013
Source: EIA, Jan. 1, 2014 database, published June 2014
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm
40
Crude Oil as Refinery Feedstock
• Crude Oil
 Complex mixture of hydrocarbons & heterocompounds
 Dissolved gases to non‐volatiles (1000F+ boiling material)
 C1 to C90+
• Composition surprisingly uniform
Element
Wt%
Carbon
84 ‐ 87
Hydrogen
11 ‐ 14
Sulfur
0 ‐ 5
Nitrogen
0 ‐ 0.2
Other elements
0 ‐ 0.1
41
Primary Hydrocarbon Molecular Types
• Paraffins
 Carbon atoms connected by single bond
 Other bonds saturated with hydrogen
H
H
H
H
H
H
H
H
H
H
n-Butane
n-Butane
• Naphthenes
 Ringed paraffins (cycloparaffins)
H
 All bonds saturated with hydrogen
HH
H
H
H
H
H
• Aromatics
 Six carbon ring (multiple bonding)
 All bonds are unsaturated
H
H
H
H
H
Cyclohexane
H
H
H
H
CH3
H
• Olefins
 Usually not in crude oil
Toluene
Benzene
 Formed during processing  At least two carbon atoms connected by
double bond
H
H
H
H
H
H
H
H
1-Butene
42
Example Heterocompounds
Composition & Analysis of Heavy Petroleum Fractions
K.H. Altgelt & M.M. Boduszynski
Marcel Dekker, Inc., 1994, pg. 16
Petroleum Refining Technology & Economics – 5th Ed.
by James Gary, Glenn Handwerk, & Mark Kaiser, CRC Press, 2007
43
Characteristics of Petroleum Products
Refining Overview – Petroleum Processes & Products, by Freeman Self, Ed Ekholm, & Keith Bowers, AIChE CD‐ROM, 2000
44
100
97.8°F
Ethane & Lighter
180°F
90
Propane
80
Butanes
70
350°F
400°F
60
Barrels
Pentanes
Light Naphtha
50
Heavy Naphtha
40
Distillate
650°F
AGO
30
20
LVGO
850°F
HVGO
10
1050°F
Vacuum Resid
0
Total
Continuum
Fractions
47
Crude Oils Are Not Created Equal
48
Petroleum Products
 There are specifications for over 2,000 individual refinery products
 Intermediate feedstocks can be routed to various units to produce different blend stocks
• Depends upon the local economics & contractual limitations
Ref: Unknown origin. Possibly Socony‐Vacuum Oil Company, Inc. (1943)
49
Raw Crude vs. Refined Product
50
Petroleum Products
• Refinery Fuel Gas (Still Gas)
• Wax
• Liquefied Petroleum Gas (LPG)
• Asphalt & Road Oil
 Ethane & Ethane‐Rich Streams
• Petroleum Coke
 Propanes
• Petrochemicals
 Butanes
• Sulfur
• Gasoline
 Naphtha
• Middle Distillates
 Kerosene
 Jet Fuel
 Diesel, Home Heating, & Fuel Oil
• Gas Oil & Town Gas
• Lubricants
EIA, refinery yield – updated April 20, 2014
http://tonto.eia.doe.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm
51
Motor Gasoline Volatility Classes (ASTM D 4814‐13)
52
What are Octane Numbers?
• References:
 iso‐octane  100 (2,2,4‐trimethylpentane)
 n‐heptane  0
iso-Octane
• Tendency for auto‐ignition upon compression
 Gasoline — bad
n-Heptane
 Tendency of gasoline to cause “pinging” in engine
 Higher octane needed for higher compression ratios
140
120
100
 RON — Research Octane Number
80
• Part throttle knock problems
 MON — Motor Octane Number
• More severe — high speed & high load conditions
 (R+M)/2 – Road Octane Number
Research Octane Number
• Different types (typically RON > MON)
60
40
20
0
Aromatics
‐20
Naphthenes
Olefins & Cyclic Olefins
‐40
Iso‐paraffins
• Average of MON & RON
Normal Paraffins
‐60
• Reported at the pump
0
50
100
150
200
250
300
350
400
450
500
Boiling Point [°F]
53
14
30
Conventional Gasoline
12
Conventional Gasoline
25
10
Reformulated Gasoline
8
Aromatics (vol%)
Olefins (vol%)
20
6
Reformulated Gasoline
15
10
4
5
Averaged Summertime Parameters
2
Averaged Summertime Parameters
Averaged Wintertime Parameters
Averaged Wintertime Parameters
0
0
1997
1998
1999
2000
2001
2002
2003
2004
1997
2005
350
1.4
300
1.2
1998
1999
2000
2001
2002
2003
2004
2005
Conventional Gasoline
Conventional Gasoline
1.0
Benzene (vol%)
Sulfur (ppm)
250
200
150
0.8
0.6
Reformulated Gasoline
Reformulated Gasoline
0.4
100
Averaged Summertime Parameters
50
Averaged Summertime Parameters
0.2
Averaged Wintertime Parameters
Averaged Wintertime Parameters
0.0
0
1997
1998
1999
2000
2001
2002
2003
http://epa.gov/otaq/regs/fuels/rfg/properf/rfg‐params.htm
2004
2005
1997
1998
1999
2000
2001
2002
2003
2004
2005
Middle Distillates
• General classifications
• Properties
 Kerosene
 Flash point
 Jet fuel
 Cloud point / Pour point
 Distillate fuel oil
 Aniline point
• Diesel  Cetane number
• Heating oil
 Viscosity
 Water & sediment
55
What are Cloud & Pour Points?
 Indicate the tendency to form solids at low temperatures – the higher the temperature the higher the content of solid forming compounds (usually waxes)
• Cloud Point
 Temperature at which solids start to precipitate & give a cloudy appearance
 Tendency to plug filters at cold operating temperatures
• Pour Point
 Temperature at which the oil becomes a gel & cannot flow
Melting Points of selected long‐chain normal & iso paraffins
typically found in middle distillates
Solidification of diesel fuel in a fuel‐filtering device after sudden temperature drop
“Consider catalytic dewaxing as a tool to improve diesel cold‐flow properties”, Rakoczy & Morse, Hydrocarbon Processing, July 2013
56
Comparison of Boiling Ranges
57
Product Economics — Crack Spread
• Estimates the value added by refining as an industry
• 4 standard spreads
 5‐3‐2
• 5 bbl crude  3 bbls gasoline + 2 bbls heating oil/diesel
 3‐2‐1
• 3 bbl crude  2 bbls gasoline + 1 bbls heating oil/diesel
 2‐1‐1
• 2 bbl crude  1 bbls gasoline + 1 bbls heating oil/diesel
 6‐3‐2‐1
• 6 bbl crude  3 bbls gasoline + 2 bbls heating oil/diesel + 1 bbl residual fuel oil
• Rule of thumb for profitable operating environment
 Long held view – greater than $4 per bbl as strongly profitable
 Current view – should be greater than $9 per bbl to be profitable
59
Crack Spread Calculation
• Example — Bloomberg, 1/4/2015
 Prices
• WTI Cushing Spot $52.69 per bbl
• Brent
$56.42 per bbl
• RBOB Gasoline $1.4334 per gal
• Heating Oil
$1.7957 per gal
 5‐3‐2 Spreads
• WTI:
42   3  1.4334  2  1.7957   5  52.69
 $13.60 per bbl
5
http://www.bloomberg.com/energy/
• Brent: 42   3  1.4334  2  1.7957   5  56.42
 $10.09 per bbl
5
60
Prices Are Crude Specific
Ref: Statistics, Oil & Gas Journal, January 27, 2014
61
Historical Crude Prices & Margins
Updated Jan. 2, 2015
Source: http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm
62
Prices Are Crude Specific
EIA published monthly production data– updated Jan. 2, 2015
http://www.eia.gov/dnav/pet/pet_pri_spt_s1_m.htm
http://tonto.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=IMX2810004&f=M
63
Historical Crude Prices & Crack Spreads
Updated Jan. 2, 2015
Source: http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm
64
Historical Crude Prices & Crack Spreads
Updated Jan. 2, 2015
Source: http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm
65
Description of Petroleum Refinery
• Manages hydrocarbon molecules
• Organized arrangement of manufacturing processes
 Provide physical & chemical change of crude oil
 Salable products with specifications & volumes as demanded by the marketplace
• Complete refinery will include:
 Tankage for storage
 Dependable source for electric  power
 Waste disposal & treatment  facilities
 Product blending facilities
 Around the clock operations
 Conversion units
66
Petroleum Refinery Schematic 67
Petroleum Refinery Schematic 68
Petroleum Refinery Block Flow Diagram Gases
Polymerization
Sulfur
Plant
Sat Gas
Plant
Gas
Fuel Gas
Butanes
Alkyl
Feed
Gas
Separation
&
Stabilizer
Alkylation
LPG
Polymerization
Naphtha
Isomerization
Light Naphtha
Alkylate
Aviation
Gasoline
Automotive
Gasoline
Isomerate
Naphtha
Hydrotreating
Heavy
Naphtha
Atmospheric
Distillation
Crude
Oil
Sulfur
LPG
Reformate
Naphtha
Reforming
Solvents
Naphtha
Jet Fuels
Kerosene
Desalter
Kerosene
Distillate
Hydrocracking
AGO
LVGO
Vacuum
Distillation
Gas Oil
Hydrotreating
Fluidized
Catalytic
Cracking
Cat
Distillates
Visbreaking
Vacuum
Residuum
Distillate
Hydrotreating
Solvents
Treating &
Blending
Heating Oils
Diesel
Fuel Oil
HVGO
Solvent
Deasphalting
Cat
Naphtha
Cycle Oils
Residual
Fuel Oils
DAO
Coker
Naphtha
Heavy
Coker
Gas
Oil
SDA
Bottoms
Asphalts
Naphtha
Distillates
Fuel Oil
Bottoms
Solvent
Dewaxing
Lube Oil
Lubricant
Greases
Waxes
Waxes
Coking
Light Coker
Gas Oil
Coke
70
Catalytic Cracking
• Catalytically crack carbon‐carbon bonds in gas oils  Fine catalyst in fluidized bed reactor allows for immediate regeneration
 Lowers average molecular weight & produces high yields of fuel products
 Produces olefins
• Attractive feed characteristics
 Small concentrations of contaminants
• Poison the catalyst
 Small concentrations of heavy aromatics
• Side chains break off leaving cores to deposit as coke on catalyst
• Must be intentionally designed for heavy resid feeds
• Products may be further processed
 Further hydrocracked
 Alkylated to improve gasoline anti‐knock properties
72
Naphtha Reforming
• Purpose to enhance aromatic content of naphtha
 Improve the octane rating for gasoline
 Hydrogen as by‐product
• Used in hydrotreating to remove sulfur & nitrogen
• Primary reactions
 Dehydrogenation
Naphthenes → Aroma cs
 Isomerization
Normal Paraffins → Branched Isoparaffins
Dehydrogenation
+
3 H2
Isomerization
CH3
CH3
CH3
CH2
• Reformate desirable for gasoline but …  High octane number, low vapor pressure, very low sulfur levels, & low olefins concentration
 US regulations on levels of benzene, aromatics, & olefins – air quality concerns
CH3
CH3
CH3
Dehydrocyclization
CH3
CH3
+
H2
CH3
CH3
+ H2
74
Delayed Coking
• Process heavy residuum to produce distillates (naphtha & gas oils) that may be catalytically upgraded
Gas
 Hydrotreating, catalytic cracking, and/or hydrocracking
Naphtha
• Attractive for heavy residuum not suitable for catalytic processes
Coke Drums
 Large concentrations of resins, asphaltenes, & heteroatom compounds (sulfur, nitrogen, oxygen, metals)
Light Gas O
Heavy Gas O
• Metals, sulfur, & other catalyst poisons generally Coke
Fractionator
end up in coke
 Sold for fuel & other purposes
• Carbon rejection process
Fired Heater
Steam
Fresh Feed
75