Oil Refining in the United

States
DANIKA HASHER
 Brief History of the PES refining
complex
 Point Breeze Refinery was built in 1866 by Atlantic Petroleum Company and they
produced Kerosene
 1918 Gasoline & aviation fuel was being produced and sold
 1920 Gulf Oil built Girard Point Refinery
 During WWII both refineries were producing 69,000 barrels a day
 1966, Atlantic Refining Co. and Richfield Oil Co. became ARCO.
 1982 Gulf became Chevron, and Girard Point became the Chevron USA
Philadelphia refinery.
 SUNOCO bought out Atlantic in 1988 and in 1994 Chevron with the plan to
consolidate both refineries
 2012 Carlyle Group and SUNOCO became Philadelphia Energy Solutions
 The complex is the largest on the East Coast and processes 335,000 barrels a
day
PADD
 Originally used for
rationing gasoline
during WWII
 Now used to track the
movement of crude oil
and petroleum
product movement
throughout the US.
 This system is helpful in
understanding refinery
economics
History of Oil Refining

 In the 20th century oil became the preferred energy source because
petroleum is so flexible
 The prior energy sources, whale oil and coal, were more expensive to
produce when compared to the production of kerosene
 Advancing technology and the discovery of crude sources made
production easier.
 WWI helped cement oil as a critical military asset
 In the early stages natural gas was just flared off instead of being
processed
History continued…

 The big three companies- ExxonMobil, BP, & Shell

 Rockefeller  Standard Oil ExxonMobil
 Royal Dutch Petroleum Royal Dutch & Shell Transport and Trading Shell
 Anglo-Persian Oil Company  British Petroleum (BP)
 With the discovery of the Spindletop field in TX companies like Texaco and
Gulf were created and the US was given an advantage in the Gulf
 The seven sisters are: Exxon, Mobil, BP, Shell, Texaco, Gulf, & Chevron
Impact of OPEC

 Created to hinder the Western companies and drive prices down

 Members include: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya,
Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.
 The creation of OPEC has shifted the pricing and production from Western
companies
 Control 73% of production of gas and oil
Crude Sources
Crude Sources Continued

 Crude oil comes from many countries around the world

 Refineries have departments that buy and sell crude that seems to be the
most economical for the company
 Domestic crude can be expensive because of the Jones Act (1920)
mandates that any goods shipped between US ports is done so in a ship
with an American Flag, nowadays these ships are few and far between
making it to hard to ship crude from the gulf up to the east coast.
 Its easier for refineries in the gulf to get domestic crude because of
pipelines that come from the Dakotas, along with crude extracted in the
gulf itself
Product Markets

 Most of the Diesel fuel produced here in the United States gets shipped
over to Europe
 This is because US refineries have the capacity to produce low sulfur Diesel
 This is also paired with the fact that Europe mainly uses a low sulfur Diesel
 Today gasoline is worth very little and all the money is being made off of
Diesel
 The way that all the money is made off of crude is determined off of the
amount of cracks they can get, and the goal is to get more of the higher
earning products
Different types of
Gasoline
required
 Future of the Industry

 Fracking will be even bigger than it is now because of advancements in

technology
 Alternative ways to run and produce natural gas will be explored in refineries
 The US will be shifting from being a big oil importer to being an exporter with the
discovery of vast fields of Bakken crude in the Dakotas
 Pipelines that connect the east coast with the flow of crude from the Midwest
will make it cheaper to run
 Lower ppm requirements will go into effect of products making them greener
 Even if they aren’t fully put into effect with todays administration there is still an
incentive through RINS taxes/credits for refiners to hit this limit
Works Sited
 Oil, economic growth and strategic petroleum stocks. (2014, November 07). Retrieved from https://www.sciencedirect.com/science/article/pii/S2211467X14000443

 Energy is Powering Environmental Progress. (n.d.). Retrieved from https://www.api.org/news-policy-and-issues/state-of-american-energy/soae-environmental-progress

 U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (n.d.). Retrieved from https://www.eia.gov/environment/emissions/carbon/

 Reformulated Gas. EPA,(1999) https://nepis.epa.gov/Exe/ZyPDF.cgi/00000FG5.PDF?Dockey=00000FG5.PDF

 Tier 3. EPA (2010) https://nepis.epa.gov/Exe/ZyPDF.cgi/P100HVZM.PDF?Dockey=P100HVZM.PDF

 Crude Oil Markets and Production. (2015). Investing in Energy, 65-74. doi:10.1002/9781119204442.ch7

 U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (n.d.). Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=4890

 EIA Crude imports(n.d.). Retrieved from https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUS1&f=M

 Invention and Innovation in the Petroleum Refining Industry. John L. Enos (1962) https://www.nber.org/chapters/c2124.pdf

 PES Philadelphia Refining Complex. (2018). Retrieved from http://pes-companies.com/refining-complex/history/

 Jeff, Aby, & Lola. (2018). Oil 101 - History of Oil - A Timeline of the Modern Oil Industry. Retrieved from https://www.ektinteractive.com/history-of-oil/

 U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (2017). Retrieved from https://www.eia.gov/tools/faqs/faq.php?id=29&t=6

 Where Our Oil Comes From. (n.d.). Retrieved from https://www.eia.gov/energyexplained/index.php?page=oil_where

 Radcliffe, B. (2018, April 17). The Jones Act. Retrieved from https://www.investopedia.com/terms/j/jonesact.asp