Oil Industry Basics: Refineries and Refining

Basics of the Petroleum Industry V: A Simple Look at Refineries and Refining Costs...

If you’ve been following along, you’ve learned some basics about where oil comes from, how large accumulations of oil form, and how oil companies find those accumulations. Last time out, we looked at the economic realities of the oil business; how companies need to factor in not only the costs of finding new oil (finding costs), but also of getting it out of the ground (producing costs), and getting it to market (transportation costs). That’s only part one of the process, though, because there is almost no use for oil in its raw state. Crude oil, oil that’s just as it comes out of the ground, is highly variable in both chemistry and composition; but almost every use for petroleum products requires that the product fall within a narrow range of compositions. You think “Oil is just oil”? Well, no: oil is composed of lots of things, which is one reason why it’s proven so versatile over the last century or so.

Crude oil is made up mostly of two elements: hydrogen and carbon, which is why we call oil a hydrocarbon. Those two elements can combine in a great many different physical arrangements, and each of those arrangements forms a different kind of hydrocarbon molecule. You may be familiar with some of these molecules already; molecules with names like methane, propane, butane, and octane. Hydrocarbons have unusual physical properties that allow complex molecules to join with other complex molecules to form  even more complex hydrocarbons. There are hundreds of different molecules in nature, and even more among the vast number of man-made molecules that we lump together under the term "plastics." Crude oil also contains other elements in different amounts; among them oxygen, nitrogen, sulphur, and trace amounts of many metals.

Produced crudes are composed of many slightly different hydrocarbons, mixed together in different proportions. How much of which hydrocarbons are present in a given crude oil is a result of many variables. Among them are things like the original source material that was “cooked” into crude oil, the length of time the oil spent in the cooking pot, how high the temperature was, and the chemistry of the water with which the crude oil was mixed in its reservoir. If the field from which the crude comes is fairly shallow, bacteria can also have consumed some of the lighter hydrocarbon molecules over the millennia, leaving behind oil made heavier by the process of biodegredation.

Hydrocarbons are usually separated into light and heavy classes. The higher the ratio of hydrogen atoms to carbon atoms gets in a given molecule, the lighter the hydrocarbon. Methane (a gas), is the simplest and lightest hydrocarbon: it has four hydrogen atoms and one carbon atom. Heavy hydrocarbons are those with a low ratio of hydrogen to carbon atoms. Heavy hydrocarbons include the asphaltenes, which have only about 1.2 hydrogen atoms for every carbon atom. Crude oils are also classified as light or heavy, depending in part on which hydrocarbon molecules are most common. When we hear reports about the price per barrel of oil, the price quoted is usually for the best-quality oils: so-called light, sweet crude. Light hydrocarbon molecules tend to produce more energy than heavy hydrocarbons when they’re burned, and since the majority of crude oil is turned into jet fuel, gasoline, diesel, and heating oil; light crude tends to be in high demand. “Sweet,” by the way, means that the crude contains less than 0.5% sulfur – sour oil, which has more sulfur (usually in the form of hydrogen sulfide) needs more processing steps to make fuel.

The process of turning crude oil into the many different petroleum products used in our society is called refining. Refineries are industrial sites where many different processes are used to separate out individual hydrocarbons or groups of hydrocarbons. The world’s largest refinery, Paranaguá, is operated by the Venezuelan national oil company Petreleos de Venezuala, S. A. (Pedevesa). Actually a complex of three refineries, Paraguaná can process almost a million (940 thousand) barrels of crude per day (a barrel is 42 US gallons, about 1.6 cubic meters). The largest refinery in the USA is ExxonMobil’s complex in Baytown, Texas, which has a maximum capacity of 570 thousand barrels/day. Refineries usually cover large land areas, often several square miles. Most refineries are in or near areas where oil is produced, although many near the Gulf Coast of the United States process crude oil shipped in tankers from overseas. Refinery complexes are notable for their enormous, tangled masses of pipes of many sizes that come together to create towers and other strange arrays; for having few buildings for their large footprint; and for often having an open flame, or “flare,” atop one or several towers. In addition to separating out the various hydrocarbons, refineries also remove other impurities from the oil.

Many processes are used to separate the different hydrocarbon molecules from each other. An atmospheric distillation unit simply allows molecules of gas (methane, for instance) to bubble out of the oil; the gaseous portions are siphoned off at this point. Some of the gas may be flared (burned), but this product is commonly piped elsewhere in the refinery complex to be used as fuel for later steps. The liquid portion continues into giant furnaces, where batches of crude are heated. Different liquid hydrocarbons boil at different temperatures, which allows them to be separated from one another by fractional distillation: the boiling crude feeds into tall distillation columns, and light hydrocarbons like butane and propane reach the very top of the column and leave by piping there. The hydrocarbons in gasoline leave the tower lower down; followed by kerosene (principal component of aviation fuel), diesel, and heating oil. The processing is much more complex than this, of course, and even the simplest refining will involve multiple stages of fractional distillation.

Leftover heavy hydrocarbons are also processed further. The lightest remaining fraction can be turned into lubricating oil, such as that in your car’s crankcase, but most of the remaining portion of the crude oil consists of heavy molecules – those with small amounts of hydrogen, which burn poorly and aren’t suitable for fuel. Some of what remains is only suitable for making asphalt and paraffin, but a modern refinery is like a meat-packing plant that “uses everything but the squeal.” Better living through chemistry means that refineries employ several different techniques to “crack” a single heavy hydrocarbon molecule into two or more lighter molecules. These processes require more time and more energy than the first, simple distillation process, and most also require the use of catalysts – substances that speed up chemical reactions. The cracking process can turn heavy hydrocarbons into gasoline or kerosene, even propane. For those crude oils that don’t have large amounts of the lighter hydrocarbons, hydrocracking and catalytic cracking are important in producing the light fractions that can be used to make fuels. Cracking heavy hydrocarbons to make gasoline requires more time and energy than distillation, and also requires the introduction of catalysts. All three factors add to the expense of refining heavy crudes, which explains why light crude has a higher price on the commodities market.

In addition to passing through multiple separation processes and perhaps cracking as well, every drop of crude that enters a refinery also passes through several steps intended to remove metallic and non-metallic impurities. These may be as simple as salt, which comes from water mixed in with the produced oil. Sulfur is a common contaminant, one that must be removed for clean-burning fuels – US refineries generate tens of thousands of tons of sulfur every day. Metal impurities such as nickel, iron, and copper are also removed, though in much smaller quantities than sulfur.

In what seems like a violation of the law of conservation of mass, a forty-two-gallon barrel of oil usually yields fuels, lubricants, and other hydrocarbons that add up to a little less than forty-three gallons of product. The “excess” is a result of the cracking process, which transforms dense molecules into light, less dense hydrocarbons. Even though refineries seem to put out more than they take in, in truth efining crude oil into gasoline is an expensive process, in part because of the large capital investment needed to build a refinery. Energy costs are also substantial, though at least a portion of the energy is generated through combustion of “waste” gases at most sites. Additives such as catalysts are also part of the costs, as is labor and maintenance of tens of thousands of pipes, vessels, towers, and other containers that must be carefully monitored. All told, crude oil’s visit to a refinery adds anywhere from twenty to thirty cents to the price of a gallon of gasoline in the US, according to the United States Energy Information Agency.

This is number five of a series of minilectures on the oil industry:

1) Where Does Oil Come From?
2) Where Do Oil Companies Find Oil?
3) How Do Oil Companies Find Oil?
4) The Economics of Petroleum Exploration and Production
5) Refining  <== You are here.  Future installments include:
6) The Economics of Big Oil
7) The Future of Oil