According to Energy Information Administration data, the 26 refineries in the Midwest/PADD 2 region processed an average 3.6 MMb/d of crude oil in 2016—up 300 Mb/d from the 3.3 MMb/d refined in 2010. Over the same six-year period, production of light oil production in the region shot up by over 1 MMb/d, mostly from the prolific Bakken formation in North Dakota. Yet Midwest refiners did little to take advantage of the sudden abundance of “local” production, increasing instead their appetite for imported heavy crude from Western Canada by nearly 1 MMb/d—from 800 Mb/d in 2010 to 1.8 MMb/d in 2016. Today we explore the trend for PADD 2 refineries to run more heavy crude even as shale output surged in their backyard.
(This blog is based on Morningstar Commodities and Energy’s recently published Midwest Refining Outlook. See contact information at the end of this blog to request a copy of the report.)
We have previously detailed the ironic circumstance that U.S. refiners struggled to process growing domestic light shale crude volumes because many refineries are configured to handle heavy crude (see Reckoning Day). We have blogged extensively on the efforts of Canadian producers to get their heavy crude to market—including to the Midwest (see If We Ever Get Out of Here). As we described back in 2014, Midwest refiners enjoyed spectacular margins during the crude shale boom because of discounted crude prices (see Midwest Crack Spread Margins). While most Midwest refiners have not increased light crude processing in the Shale Era, one exception is Marathon’s Utica strategy (see Utica Shale Strategy). More recently we covered efforts by Midwest refiners to ship more refined products into Eastern markets (see Lady Arbitrage).
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About the song
"Born to Run" was written by Bruce Springsteen, and appears as the first song on side two of Springsteen's third studio album of the same name. The song was recorded between January and August 1974 at 914 Sound Studios in Blauvelt, NY, with Springsteen and Mike Appel producing. Copies of the song were intentionally leaked to key East Coast deejays, where it quickly became a popular requested song. With the pump primed, the song was officially released as a single in August 1975, and went to #23 on the Billboard Hot 100 Singles chart. "Born to Run" would go on to be covered by many artists, including Allan Clarke (who was the first one to record the tune), Suzi Quatro, Frankie Goes To Hollywood, and Roger Daltrey. Personnel on the record were: Bruce Springsteen (vocals, guitar), Garry Tallent (bass), Ernest "Boom" Carter (drums), David Sancious (keyboards), Danny Federici (organ, glockenspiel), and Clarence Clemons (tenor sax).
The album, Born to Run, was recorded between May 1974 and August 1975, with Springsteen, Mike Appel, and Jon Landau producing. Released in August 1975, the album went to #3 on the Billboard Top 200 Albums chart, and has been certified 6x Platinum by the Recording Industry Association of America.
Bruce Springsteen is an American singer, songwriter, and musician. Nicknamed "The Boss" by his fans, he has sold more than 135 million records worldwide as a member of the E Street Band and as a solo artist. He has made 19 studio albums, 23 live albums, one soundtrack album, eight compilation albums, seven EPs, and 70 singles. Springsteen has won 20 Grammy Awards, two Golden Globe Awards, one Academy Award, and one Tony Award. He is a member of the Songwriters Hall of Fame and the Rock and Roll Hall of Fame. He has been awarded Kennedy Center Honors and the Presidential Medal of Freedom, and was named the MusiCares person of the year. Springsteen continues to record and tour, and was recently involved in the Jersey 4 Jersey Show to raise money for COVID-19 relief funds.
