The US has more refining capacity than any other country (17MMb/d) and nowhere are refineries as sophisticated. In the past two years US refineries in the Midwest region have been running close to full capacity and refineries in the Gulf Coast region have led a refined product export boom. At the same time, refineries on the East Coast have been shuttered or saved only by a combination of last-minute deal-making and government subsidies. What makes one refinery better than another? Today we walk through the first distillation process in a complex refinery.
We have talked a lot about refining in these annals and from time to time we’ve rolled up our sleeves and gotten into the details of how a refinery works (see for example The Bakken Buck Starts Here – Bakken Crude Pricing Part IV). What follows is a more complete description of the main refining processes that are found in a typical complex refinery. We broke this tutorial into two parts – covering atmospheric distillation today and upgrading processes in Part 2. As you might expect – since refining is a topic you need a degree in engineering to master - this is going to be a beginner’s guide only. Our goal is to convey enough of the process to improve understanding about the relative values of different crudes when they are processed in a refinery. That will lay the groundwork for appreciation of the challenges coming to US refining over the next decade and their implications for markets and prices. All that will be your reward for hanging on through this Complex Refining 101 tutorial. One other housekeeping note before we begin….don’t try this at home.
We will get to the refinery processes in a moment but first lets review the big picture so that when we get under the hood you are aware of the overall goals. Refineries take “raw” crude oil and break it down into component parts or fractions. Every refinery has a toolkit of processes that are specialized for breaking down either crude itself or particular crude fractions into component parts. The more sophisticated the refinery – the more breaking down goes on. Generally speaking, the process objective is to break down heavier (more dense) components that have larger hydrocarbon molecules into lighter (less dense) components that have smaller hydrocarbon molecules. Once the breaking down is complete then refineries reconstitute and/or blend these component parts together again to make refined products to meet consumer demand. The refinery’s objective is to make the most valuable mix of refined products possible from a given crude input – using the refinery processes available. Over time, refiners have to pay careful attention to the cost of the crude that they process and the fixed and variable cost of the processing units required to make refined products. The fixed cost investment required to add new refinery process units is extremely high and typically is only recouped if the units are used consistently over 20 years or more.
Refinery Process Overview
We start with a simplified diagram (below) of a complex refinery process.
Overview of Refinery Processes (Source: RBN Energy)