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12 July 2007
Refineries retrofit for goop and gunk
Some oil companies are staking much of their future on the gunky oil that comes out of Canada’s oil sands. Automation has a piece of this action.
The Wall Street Journal reported the first crude from the Albertan oil sands reached the giant Cushing, Okla., pipeline hub last year.
It is one of the locations where global oil prices are set. To get there, the crude traveled through a pipeline that for decades carried oil in the opposite direction.
A month later, a second pipeline was reversed, and Canadian crude reached all the way down to southeast Texas, the world’s largest cluster of petrochemical plants and refineries and the traditional front door for much of the U.S.’s oil supplies.
The pipelines, operated by Enbridge Inc. and Exxon Mobil Corp., represent long-term, multibillion-dollar investments in infrastructure to enable Canadian crude to keep cars running on U.S. roads.
Currently, the U.S. pipeline grid is set up to import oil into the Gulf Coast. Some of that oil is sent north by pipeline or barge to refineries in the country’s Midwest region.
However, global supplies are increasingly unreliable, as shown by Exxon and ConocoPhillips’s decisions last month to leave Venezuela, a major crude supplier to the U.S., rather than give up lucrative projects there to a nationalization wave.
Canada is a reliable exporter, free from the political turmoil that racks much of the oil-producing world.
The oil sands currently produce about 1.2 million barrels a day, but will churn out 3.7 million barrels a day by 2020. Much of this new supply will probably go to the U.S. Producers are very interested in capturing more U.S. markets for Canadian crude.
Although figures are not exact, the amount on Canadian oil-sands development, new pipelines to bring the crude to the U.S., and to retrofit refineries will probably top $15 billion a year through the middle of the next decade.
This easily exceeds the spending on the U.S. ethanol industry, according to London-based consultant New Energy Finance.
