Yes it is true. America’s need for more oil refining capacity is bringing a new refinery on line. In India. Shouting Into The Void tells the tale.
Here’s some news that should make all the energy independence buffs throw their hats to the floor and shout “Tarnashion!” India’s Reliance Industries is building the world’s largest oil refinery. This refinery, scheduled for completion this December, is planned for refined fuel export to Europe and the US exclusively. So by the end of the year we can be dependent on India for gasoline shipments. Gas prices could drop by 60 cents a gallon from this.
How can this lower prices when we’re being told we live in a world of tight oil supplies? It’s actually quite simple. This enormous refinery will process sour crude oil. Sour refers to the sulfur content of the petroleum. Sour crude has lots of sulfur. Sweet crude has little. Removing sulfur from oil is an expensive process, so in the past oil refiners have chosen to favor sweet crude. I was surprised to learn there is actually a glut of sour oil. The extra 200,000 daily barrels Saudi Arabia pledged this weekend to pump is all sour crude. That’s why the announcement did nothing to lower prices. The Saudis will pump more unwanted oil. Iraq has 30 million barrels in tankers floating at sea. They have no destination because no one wants to buy sour crude.
Interesting. We are not suffering from an oil shortage. We are suffering from a refinery shortage.
So maybe we need to refine our peak oil theories. Maybe we have not reached peak oil. Maybe we have reached peak refinery. And who benefits the most from peak refinery? The people who already own a refinery. Why it is like a license to print money. I wouldn’t be surprised if I found that oil companies were in cahoots with enviros on this.
Fortunately there appear to be some real hicks in flyover country who are trying to profit from the current situation.
ELK POINT, S.D. – A Texas-based energy firm planning to build the first U.S. oil refinery in more than 30 years said today that Union County is a finalist for the $8 billion project.
The refinery, which Hyperion Resources Inc. described as a “green energy technology center,” would create as many 10,000 construction jobs and employ 1,800 after its completion in four years.
Hyperion also is considering “alternative sites” in at least two other Midwest states, project executive Preston Phillips said at a late afternoon news conference at the county courthouse. A final decision should come by the first half of 2008, he said.
The announcement ended months of intense speculation over the so-called Project Gorilla. Until Wednesday, only a few local and state leaders knew the identify of the firm that has been optioning thousands of acres of farmland northwest of Elk Point, a city of about 1,800.
Texans? And folks from South Dakota? How crude and unsophisticated. However, look at the time line on that sucker. Four years.
You have to ask yourself what is the point of even starting a project like that if it will have no effect on the supply situation for at least four years. Why bother? It is all so hopeless. Just ask our Democrat Congress. They will tell you. There is no point in drilling now in the hopes of having oil for delivery in the future. And what is that “future delivery” stuff? Sounds like speculation. I think an investigation is required.
If the American people re-elect the current controlling Party to majority status in Congress, they will deserve what they get and if past history is any guarantee of future performance we are going to get what we deserve hard. Very hard. Or as they say in some circles, “without lubrication”.
Cross Posted at Power and Control
Comments
2 responses to “Without Lubrication”
I believe 1976 was the last new refinery in the US. There have been technical increases to help gain a bit more capacity, but that has not helped the overall situation due to the high number of ‘blends’ of specific gasoline being mandated by the feds, state governments and even some localities. Every time you want a ‘blend’ you are demanding a special run for additives, octane adjustment and other refining procedures to an extremely limited market… which expects the refiners to know just how much of that special blend for that limited population.
We would have much cheaper gasoline just by keeping the blends down to a small, fixed number. That would, however, require some cooperation amongst the states *and* the federal government and will not happen as it is a federalism issue: the Constitution gives no purview to the federal government on energy issues, that is a state concern.
So, the solution?
How about those federal ‘superfund’ lands designated as unsafe to live in or even toxic going up for rent to refiners willing to demonstrate an effective clean-up system either over time or in a set private fund for dealing with it after the rental time elapses? Those refiners that could utilize safer, less polluting means and offer up ways to clean up land that can’t be used for anything else could do so. At the end you wind up with increased capacity and cleaner lands. The refiners would still be liable for all state laws outside of the federally mandated contaminated zone, just as past polluters are now, save for their utilization would be considered a separate issue from the original pollution allowing those impacted by that to go after the original polluters. You wouldn’t need an environmental impact statement as this is considered pretty much maximally impacted environment already. Nor the other host of regulations on such things, which increase paperwork and delay start time… for over 30 years at this point.
The oil and gas industry has gotten very good at sub-surface analysis and underground water flow problems. Why not leverage that for the citizenry with an extremely cheap, verging on free land rental?
It won’t be cleaned up by the feds any time soon, thats for sure. At least this way we would get some confidence that companies that knew what they were doing would by trying to fix the problem while still yielding refined fuels.
Do the same for energy companies needing land for R&D, new source analysis, storage and transportation of energy goods, and you just might be seeing a different energy outlook in 10-15 years. I can imagine that the fusion folks, once they demonstrate such plants, would love to leverage some of the sites closer to cities for low land rental cost and needing to put money into remediation – which becomes a fixed sunk cost of doing business (overhead).
Mind you, neither political party could do that as it is inventive, minimally intrusive, puts little reliance on the federal government, encourages the energy markets, and looks towards those that can develop new, low cost land remediation techniques for a host of polluted areas. Even though a bill to pass it would be very, very simple….
That is what is called ‘energy policy’ not ‘energy plans’. Too bad we have planners running for office not those willing to set policy and let the people develop the plans.
Just a few weeks ago EPA stalled a Conoco refinery expansion in Illinois that would have been able to process 500,000 barrels per day of heavy sour Canadian crude. The story made the Wall St Journal.