Crude Oil & Refining 101

For training & educational purpose only

October 2008
 Agenda
• Global crude oil overview - Session 1 (October 28)
• Crude oil basics - Session 1
• Crude oil refining and refinery configurations - Session 1
• Refining process units and their functions - Session 2-4
– (November 25, December 16, January 15)
• Refining costs - Session 4
• Turnaround scheduling - Session 4
• Drivers and ongoing improvements - Session 5 (Feb 5)
• Emerging regulations - Session 5
• Supply planning process - Session 5
Global overview
 Current global energy usage
Global usage:
• 235 Million Barrels per day crude oil equivalent
• Fossil fuels account for approximately 88 %
– Crude Oil, 35.6%
– Coal, 28.6%
– Natural Gas, 23.7%
• Balance is made up of
– Hydro 6.4%
– Nuclear 5.6%
– Solar
– Biomass < 0.5%
– Wind
 Distribution of proved (oil)
reserves 1987, 1997, 2007

Source: BP Statistical Review

Sample of medium sour crude oil
 Proved oil reserves at end 2007

Source: BP Statistical Review

Oil reserves-to-production (R/P) ratios

Source: BP Statistical Review

 Annual oil consumption per capita

0- 5 Barrels
5-11 Barrels
11-17 Barrels
17-23 Barrels
> 23 Barrels

Source: BP Statistical Review

 2007 Regional oil production vs
consumption, million bbl/day
Region Production Consumption
USA 6.9 { 7.7} 20.7 {19.7}
CANADA 3.3 { 2.7} 2.3 { 1.9}
MEXICO 3.5 { 3.5} 2.0 { 1.9}
S. & C. AMERICA 6.6 { 6.8} 5.5 { 4.9}
EUROPE & EURASIA 17.8 {15.0} 20.1 {19.6}
MIDDLE EAST 25.2 {23.5} 6.2 { 4.7}
AFRICA 10.3 { 7.8} 3.0 { 2.5}
ASIA PACIFIC 7.9 { 7.9} 25.4 {21.1}
TOTAL 81.5 {74.9} 85.2 * {76.3}
{ } 2000 Figures
*delta reflects inv. changes, data disparity, non-petroleum
additives
China consumption up from 4.7 to 7.8 & India 2.2 to 2.8 over 2000-2007 period

Source: BP Statistical Review

 Top 12 crude oil producers in 2007,
million barrels per day
10

2 1 2 3 4 5 6 7 8 9 10 11 12

ay
a

t
SA

AE
ia

ia
ai
ad
Ira

ic
si

el

er
ab

w
w
hi

ex
us

zu
an

ig
or
Ku
C
Ar

M
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ne

N
N
C
i
ud

Ve
Sa

Source: BP Statistical Review

 Major annual oil trade movements
Multiply by 7.33 to convert to million of barrels

Source: BP Statistical Review

 Crude oil prices since 1861

Source: BP Statistical Review

 120
Crude oil pricing 2001-YTD 2008

100

80
US $/Barrel

60

40

20

0
2001 2002 2003 2004 2005 2006 2007 2008
WTI Brent MSW MSB Cold Lake
 Regional oil refining margins

Source: BP Statistical Review

 Crack spreads
• Defined as the price difference between a barrel of product and barrel
of feedstock (crude oil)
– Gas crack = I barrel gasoline minus 1 barrel crude oil
– Heat crack = I barrel #2 heating oil minus 1 barrel crude oil
– Sour or Heavy Feedstock spreads = difference between WTI crude oil and the
sour or heavy crude oil
• Based on ‘benchmark’ feedstocks and products, e.g.
– Crude oil, WTI NYMEX contract (@ Cushing, OK)
– Gasoline, NYMEX contract based on RBOB (@New York Harbour)
– Diesel, NYMEX contract based on # 2 Fuel Oil (@New York Harbour)
• Total refining gross margin = product cracks plus sour or heavy crude
oil spread
• A ratio of cracks represents approximate refinery yields, e.g.
– WTI 3/2/1 = 3 barrels of WTI produce 2 barrels of gasoline & 1 barrel diesel.
For WTI @ $125/B, Gasoline* @140/B, Diesel* @ $155/B, then 3/2/1 crack
equates to $ 20/B

* Multiply price in cents per gallon by 42 to get to $/B

Crude oil basics
 Crude oil
Typically classified by gravity and sulphur content as:
• Conventional
– Sweet ~ 20% of global reserves
– Light/Medium Sour ~ 66% of global reserves
– Heavy Sour ~ 13% of global reserves
• Un-Conventional
– Tar Sands ~ 1-2% of global supply
– Oil Shale
Crude Quality
• Density, Sulphur, TAN, MCR, B S & W, Ni & V
Crude oil
assay

Source: Chevron
Crude oil
assay

Source: Chevron
 Crude oil characteristics
Crude Oil Characteristics Volume Yield
3%
30%
Sweet > 330 API GRAVITY
(e.g. WTI, MSW, 34%
< 0.5 % Sulphur
Brent, Bonny Light) MOST EXPENSIVE 33%

Light/ Medium 3%
28 -330 API GRAVITY 22%
Sour 28%
(e.g. Arab Light, 0.5 – 2.5 % Sulphur
Arab Medium) LESS EXPENSIVE 47%

Heavy Sour 2%
<280 API GRAVITY 17%
(e.g. Maya, Cold
22%
Lake, Western Cdn > 2.5 % Sulphur
Select) LEAST EXPENSIVE 59%
 Crude oil characteristics
Crude Oil Characteristics Volume Yield
3%

> 330 API GRAVITY 21%

Synthetic
< 0.3 % Sulphur 41%
(e.g. Syncrude) MOST EXPENSIVE
35%
 Crude oil TBP curves
700 Cold Lake
Vacuum Residue

Light Sour Blend

600
Mixed Sweet Blend

500
Syncrude
Vacuum Gas Oil

0 C 400

Heavy Gas Oil

300

Fuel Oil, Kerosene, Diesel

200
Medium Naphtha

100
Light Naphtha

0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
% Liquid Volume
Examples of light, medium sour
heavy sour & synthetic crude oils
Crude Oil API Gravity Wt % Sulphur
Bonny Light 33 0.2
Brent 38 0.4
MSW 39 0.4
WTI 39 0.5

Alaska North Slope 30 1.1

Mixed Sour Blend 30 1.8
Arab Light 32 1.9

Venezuela 16 2.6
Arab Heavy 28 3.0
Western Canadian Select 21 3.3
Maya 22 3.4
Cold Lake 21 3.6

Syncrude 33 0.2
 Medium sour and heavy crude oil
discounts to Canadian medium sweet
25 2001-YTD 2008

20
US $/Barrel

15

10

0
2001 2002 2003 2004 2005 2006 2007 2008
MSB Cold Lake
Crude oil supply to E. Canada
Come By Chance
St. John
Edmonton
Dartmout
h
Montreal
Portland

Nanticoke
Chicago Sarnia

Patoka

Cushing

St. James

Imported Crude Oil

 Common refinery acronyms
• AGO – Atmospheric Gas Oil
• API0 – Measure of Crude Oil Density
• ATB – Atmospheric Tower Bottoms
• B–B – Butane–Butylene Fraction
• BBLS – Barrels
• BPD – Barrels Per Day
• BTX – Benzene, Toluene, Xylene
• CARB – California Air Resource Board
• CCR – Continuous Catalytic Regenerator
• DAO – De–Asphalted Oil
• DCS – Distributed Control Systems
• DHT – Diesel Hydrotreater
• DSU – Desulfurization Unit
• EPA – Environmental Protection Agency
• ESP – Electrostatic Precipitator
• FCC – Fluid Catalytic Cracker
• GHT – Gasoline Hydrotreater
• GOHT – Gas Oil Hydrotreater
• GPM – Gallon Per Minute
• HAGO – Heavy Atmospheric Gas Oil
• HCU – Hydrocracker Unit
• HDS – Hydrodesulfurization
• HDT – Hydrotreating
• HGO – Heavy Gas Oil
• HOC – Heavy Oil Cracker (FCC)
• H2 – Hydrogen
• H2S – Hydrogen Sulfide
• HF – Hydroflouric (adic)
• HVGO – Heavy Vacuum Gas Oil
• LCO – Light Cycle Oil
• LGO – Light Gas Oil
• LPG – Liquefied Petroleum Gas
• LSD – Low Sulfur Diesel
• LSR – Light Straight Run (Gasoline)
• MON – Motor Octane Number
• MTBE – Methyl Tertiary–Butyl Ether
• MW – Megawatt
• NGL – Natural Gas Liquids
• NOX – Nitrogen Oxides
• P–P – Propane–Propylene
• PSI – Pounds per Square Inch
• RBOB – Reformulated Blendstock for Oxygen Blending
• RDS – Resid Desulfurization
• RFG – Reformulated Gasoline
• RON – Research Octane Number
• RVP – Reid Vapor Pressure
• SMR – Steam Methane Reformer (Hydrogen Plant)
• SOX – Sulfur Oxides
• SRU – Sulfur Recovery Unit
• TAN – Total Acid Number
• TBP – True Boiling Point
• ULSD – Ultra–low Sulfur Diesel
• VGO – Vacuum Gas Oil
• VOC – Volatile Organic Compound
• VTB – Vacuum Tower Bottoms
• WTI – West Texas Intermediate
• WWTP – Waste Water Treatment Plant
 Acknowledgements
• Energy Information Administration (EIA)
• BP (Statistical review 2007)
• Encana (crude oil pricing)
• Shell Canada (crude oil pricing)
• IOL (crude oil pricing)
• PetroCanada (crude oil pricing)

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