Oil & Gas Refining

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In contrast to the oil and gas extraction services industry, which is very fragmented, the oil and gas refining industry is dominated by only a few large corporations. The largest oil company is Exxon Mobil, with British Petroleum at 2nd, followed by Royal Dutch/Shell as the 3rd largest. These oil companies in particular, are considered 'integrated' oil corporations meaning they operate in all factors of production, refining and marketing.¹ Oil and gas refining is a highly capital-intensive industry and because of the large amount of capital investment required, there are very few companies or competitors within the industry.

Oil and gas refineries are widely distributed and usually located close to the markets where petroleum products are consumed. Global energy data regarding petroleum production shows that world oil refining capacity has steadily grown over the past decade, reaching approximately 82 million barrels per day.² Around 43 million barrels or 53% are produced in OECD countries.³

In the U.S. there are approximately 132 crude oil refineries most of which are located in the gulf coast. In looking at the total number of refineries worldwide, there are around 717 refineries.⁴ The U.S. has the largest number of refineries (132) followed by China at 95, and Russia at around 45 refineries. As mentioned previously, the world's total refining production capacity is estimated at 82 million barrels per calendar day.

In observing the top four countries in refining capacity, the U.S. has the largest refining capacity totaling 16.7 million barrels per day, Russia's refining capacity is at 5.4 million barrels per day, Japan at 4.7 million, and China at 4.5 million barrels per day.⁵ However, refining capacity is not the actual indicator of oil production in the number of barrels produced per day. Saudi Arabia is actually the world's largest oil producer, producing an estimated 8.4 million barrels per day, Russia is second producing 8.2 million barrels per day and the U.S. is third producing 5.7 million barrels per day.⁶

Issue 5/6: Winter 2005/Spring 2006

The Oil & Gas Industry

Table of Contents

Introduction
History
Cartels & Organizations
Production
Refining
Transportation & Storage
Marketing & Distribution
Natural Gas Industry Trends
Alternative Energy Sources
Company Research
Statistical Sources
News & Analysis
Electronic Resources & Catalog Searches

The world's first oil refinery was constructed in Ploesti, Romania in 1856.⁷   Several more refineries were eventually built at this location with significant investment from the U.S. before the refineries were taken over by Nazi Germany during World War II. Most of these refineries were destroyed in the second World War.

Currently, the world's largest oil refinery is located in Ras Tanura, Saudi Arabia. This refinery is owned and operated by Saudi Aramco. Prior to the establishment of the Ras Tanura refinery, the world's largest refinery was Abadan located in the southeastern region of Iran.

The Refining Process

As with much of the oil and gas industry, modern day refining operations are composed of very sophisticated and complex processes. These processes are used to convert crude oil into commercially consumable fuel used for transportation and are to be produced as economically and environmentally sensitive as possible. Refineries and processing plants transport fuel to large commercial customers which include power plants, chemical factories, and airports.⁸ Petroleum products such as gasoline, diesel fuel and home heating oil are not directly sent to consumers. These petroleum products are transported by pipeline or barge from the refinery to a terminal or plant, where it is temporarily stored in large tanks. The fuel is then shipped by truck railroad or ships⁹ to distributors and service stations.

According to the American Petroleum Institute (API), there are an estimated 187,000 gasoline service stations within the U.S.¹⁰ API studies also indicate that 40 different types of gasoline are made by refineries, with 90% of gasoline produced by the U.S. being used in automobiles.¹¹ In addition to providing gasoline services, U.S. service stations also purchase over 240 million gallons of used oil for consumers, which is used to produce motor oil.

The refining process is where crude oil is purified and stored. The tall towers associated with refineries, are called fractionating columns and are where crude oil is heated and boiled. However, refineries produce many different commercial products in various industries. The lightest liquefied petroleum gas fractions (propane and butane) created from the heating process are used to make plastics, fabrics, and a variety of other consumer products, as well as gasoline, kerosene and diesel fuel.¹² The heavier fractions of liquefied gas are used as home heating oil, and fuel for ships and factories. The heaviest fractions are used to make lubricants and waxes.

Each refinery has its own and unique processing scheme which is determined by the processing equipment available.¹³ The different characteristics of crude oil, operating cost and product demand are all elements that affect refinery processing. The production capacity of each refinery is controlled by economic factors and no two refineries are the same in their production operations. The specific processing conducted in refineries and the end product units are depicted in the following summaries:¹⁴

Refinery Process Units

• Atmospheric Distillation (distills crude oil into fractions)
• Vacuum Distillation Unit (further distills residuals after atmospheric distillation)
• Naphtha Hydrotreater Unit (desulfurizes naphtha from atmospheric distillation)
• Catalytic Reformer Unit (uses hydrogen to break long hydrocarbons into lighter elements which are added to the distiller feedstock)
• Distillate Hydrotreater Unit (desulfurizes distillate (diesel) after atmospheric distillation)
• Fluid Catalytic Converter Unit
• Dimerization Unit
• Isomerization Unit
• Gas storage units for propane and similar gas fuels, (spherical storage units)
• Storage tanks for crude oil and finished products, (cylindrical storage units)

Specialized End Product Units

• Gaseous fuels such as propane, stored and shipped in liquid form (used in making plastics, fabrics and other materials
• Liquid fuel blending (producing automotive and aviation grades of gasoline, kerosene, aviation turbine fuel, diesel fuels, dyes, detergents,and oxygenates)
• Lubricants (produces light machine oils, motor oils, and greases)
• Wax (used in packaging frozen foods and other consumer products)
• Sulfuric acid finishing and shipping (used as an industrial material, such as oleum)
• Tar (used in gravel and gravel roofing)
• Asphalt (for bulk asphalt shipping)
• Asphalt concrete (mix used for road surfacing)

Selected Print Resources

The literature listed in this section covers research on oil refineries and the refining process. This material looks at a wide array of subjects, issues and concepts related to oil and gas refineries and refining.

Abdel-Aal, Hussein K. Petroleum and Gas Field Processing. New York: Marcel Dekker, c2003. 364 p.
LC Call Number: TP690 .A23 2003
LC Catalog Record: 2003266688

The immediate product extracted from oil and gas wells consists of mixtures of oil, gas, and water that is difficult to transport, requiring a certain amount of field processing. The book covers oil and gas composition, two-and three-phase separation, and treatment of produced fluids. A separate section is devoted to natural gas. Annotation by Book News, Inc.

Bamberger, Robert L. and Kumins, Lawrence, "Oil and gas: supply issues after Katrina." In Federal Disaster Programs and Hurricane Katrina, edited by Douglas D. Syzerhans. New York : Nova Science Publishers, 2006.
LC Call Number: Not yet available
LC Catalog Record: 2005033113

This report discusses various oil and gas supply issues brought about by Hurricane Katrina. Issues discussed include: factors affecting oil and natural gas supply, refineries, motor fuel standards, gasoline and distillate inventories, commercial inventories and other relevant topics. A version also available as a Congressional Research Service Report to Congress. Updated September 6, 2005.
http://www.fas.org/sgp/crs/misc/RS22233.pdf (via the Federation of American Scientists web site) [PDF: 37.7 KB / 6p.]

Gary, James H. Petroleum Refining: Technology and Economics. 4th ed. New York: M. Dekker, c2001. 441 p.
LC Call Number: TP690 .G33 2001
LC Catalog Record: 2001028067

A useful publication, which systematically examines the basic aspects of current petroleum-refining technology and economics. Intended to be used as a ready reference source for technical managers, engineers, university faculty, graduate and senior level undergraduate students.

International Petroleum Encyclopedia: 2004. Tulsa, OK: Pennwell Corporation, c2004. 332 p.
LC Call Number: HD9560.1 .I565 2004
LC Catalog Record: 2005295063

A comprehensive research and global reference source on petroleum. The publication provides in depth and authoritative information, which includes a color atlas, country reports, key industry statistics, important economic indicators, chronology of events, guest essay and a directory of national oil companies and energy ministries.

Meyers, Robert A. Handbook of Petroleum Refining Processes .3rd edition. New York: McGraw Hill, c2004.
LC Call Number: TP690.H34
LC Catalog Record: 2003051175

A compendium of global refining, licensable technologies for the refining of petroleum and production of environmentally acceptable fuels and petrochemical intermediates.

Parkash, Surinder. Refining Processes Handbook. Amsterdam; Boston: Gulf Professional Pub., c2003. 712 p.
LC Call Number: TP690 .P247 2003
LC Catalog Record: 2003536599

Besides covering topics like catalytic cracking, hydrocracking, and alkylation, this volume has chapters on waste water treatment and the economics of managing or commissioning the design of a petroleum refinery. Found only in this volume is material on operating a jointly owned and operated refinery. (Over the last decade, the ownership of many refineries has shifted to small companies from the large, integrated companies. Because of this shift, many refineries are now jointly owned and operated.) This book gives readers a comprehensive introduction to petroleum refining, as well as a full reference to engineers in the field.

Peterson, D.J. and Mahnovski, Sergej. New Forces at Work in Refining: Industry Views of Critical Business and Operation Trends. Santa Monica, CA: RAND, 2003. 115 p.
LC Call Number: HD9565.P349
LC Catalog Record: 2003013082
Table of Contents
Publisher Description

Reports of discussions with representatives refining firms, technologies and service providers, research institutions, and other organizations on current and future trends in the U.S. refining industry.

Refining Statistics Sourcebook. Tulsa, OK: PennWell Pub Co. Annual. 1994 to present.
LC Call Number: HD9560.1 .R44
LC Catalog Record: 94640976

Provides figures on petroleum product demand, capacity and inputs, refining production, imports and exports, stocks of crude oil and petroleum products, transportation and petroleum movement, investment and margins, prices and demand.

Speight, J.G. Petroleum Refining Processes. New York: Marcel Dekker, c2002. 706 p.
LC Call Number: TP690 .S744 2002
LC Catalog Record: 2002283768

Written by two chemical engineers, this reference for petroleum engineers and scientists summarizes recent technological advances in the refinement of heavy oils, bitumen, and other high-sulfur feedstocks into lower-boiling products. A sampling of topics includes the evaluation of native materials, the availability of natural gas reserves, chemical kinetics, reactor design, thermal cracking, and hydrogen production. Conversion tables and an extensive glossary of terms are provided in the appendix. Annotation by Book News, Inc.

Selected Internet Resources

This web page provides industry classification information and statistics, geographic distribution information on U.S. refineries, provides access to the 2002 Economic Census Industry Report and other useful Economic Census data.

This section of API's "All About Petroleum" homepage, provides a basic overview from the industry perspective of the establishment of the first oil pipelines in the U.S., the transportation of oil to refineries, and its subsequent shipment to major commercial customers, such as power plants and factories, as well as to distributors and service stations.

A useful reference that provides a concise and thorough overview of the oil services industry. The site includes information on oil and drilling services, oil refining, key/ratio and terms, as well as an analyst insight section and other links.

The report provides an analysis on gasoline price increases and crude oil and refinery issues. The report also discusses the influences of supply and demand on gas prices, gasoline supply--U.S. production and imports, crude oil inventory, as well as other important factors affecting gasoline prices.

This web page presents an overview of the oil refining process and a general description of oil refineries. The web page contents include information on oil refinery operations, safety and environmental concerns, common processes found in refineries, co-plant siting, and a brief history on oil refineries.

An online news and directory web site, which provides news and information on oil refining. Also included on the site is a directory of energy companies, petroleum product manufacturers, and other petrochemical and trading companies

"Refineries return after Katrina," BBC News. September 6, 2005.
http://news.bbc.co.uk/1/hi/business/4217950.stm

This article looks at the effects of Hurricane Katrina on U.S. Gulf Coast refineries, by discussing the issues of emergency supplies and the effects of temporary refinery closings on the U.S. oil and gas industry

A web-based information service for the petroleum refining industry.

An EIA web page that provides a number of links and information sources on topics related to natural gas storage. Also available on this web page are featured reports, data on underground storage facilities, and a section with access to reports and analysis consisting of weekly, monthly annual reports with data-analysis on natural gas topics. Articles, publications and presentations providing analysis on natural gas storage are also available

This Internet site provides weekly, monthly and annual data on U.S. refineries, links to subject related publications and analysis, as well as other related topics on refining.

Library of Congress Catalog Searches

Additional works on oil and gas refining in the Library of Congress may be identified by searching the Online Catalog under appropriate Library of Congress subject headings. Choose the topics you wish to search from the following list to link directly to the Catalog and automatically execute a search for the subject selected. Please be aware that during periods of heavy use you may encounter delays in accessing the catalog. Please see the individual sections of this guide for catalog searches relating to those topics. For assistance in locating the many other subject headings which relate to this subject, please consult a reference librarian.

• Petroleum--Refining
• Petroleum industry and trade--Directories
• Petroleum refineries
• Petroleum AND Chemical process control
• [Keywords] Gas industry AND refining
• [Keywords] Natural gas AND refining
• [Keywords] Natural gas AND processing
• [Keywords] Petrochemical AND processing

 1. The Industry Handbook - The Oil Services Industry. Investopeida.com
http://www.investopedia.com/features/industryhandbook/oil_services.asp

 2. Oil and Gas Production - Oil Refining. International Labour Organization.
http://www.ilo.org/public/english/dialogue/sector/sectors/oilgas.htm

 3. Ibid.

 4. International Petroleum Encyclopedia 2004 . Tulsa, OK: PennWell Corporation, p. 286.

 5. Ibid., pp. 288-289.

 6. Ibid., pp. 276-277

 7. Oil Refinery. Wikipedia.
http://en.wikipedia.org/wiki/Oil_refinery

 8. All About Petroleum - From Refinery To You. American Petroleum Institute.
http://www.classroom-energy.org/teachers/petroleum/aboutpetroleum07a.html

 9. Ibid.

 10. All About Petroleum - From Refinery To You. American Petroleum Institute.
http://www.classroom-energy.org/teachers/petroleum/aboutpetroleum07a.html

 11. Gary, James H. and Handwerk, Glenn E. Petroleum Refining: Technology and Economics. 4th ed. New York: Marcel Dekker, Inc., p. 9.

 12. All About Petroleum - From Refinery To You. American Petroleum Institute.
http://www.classroom-energy.org/teachers/petroleum/aboutpetroleum07a.html

 13. Gary, James H. and Handwerk, Glenn E. Petroleum Refining: Technology and Economics. 4th ed. New York: Marcel Dekker, Inc., p. 4.

 14. Oil Refinery. Wikipedia.
http://en.wikipedia.org/wiki/Oil_refinery