The decision of the United States to stop the importation of Nigeria’s light blend of crude oil due to the shale oil boom has exposed the US refineries to the dangers associated with the processing of lighter shale oil.
As a result of the increased domestic production of shale oil, the US has slashed crude oil imports from a peak of almost 14 million barrels per day in 2006, to slightly above 7 million barrels per day.
Crude oil import from Nigeria, one of the principal sources of light crude, was also slashed from more than 1 million barrels per day in 2010 to zero in July 2014.
But the US refineries, Reuters has reported, are designed to handle medium blend crude as against the much lighter shale oil being produced in the country to replace imports from Nigeria and others.
US refiners are said to have shown a strong preference for a medium blend, but almost all the oil being produced as a result of the shale boom is much lighter than the refineries can handle.
Reuters reported that while imports of medium-heavy and heavy grades of crude oil (with specific gravity of less than 30 degrees) have remained roughly constant at 4.5 to 5 million barrels per day since 2007, imports of medium-light and light oils have dropped from 6 million barrels per day to just over 2 million.
Imports of the lightest grades of oil, the closest substitutes for domestic shale production, have been reduced from 2.5 million barrels in 2007 per day to just 500,000 in the first seven months of 2014, according to US Energy Information Administration (EIA).
The sudden change in the grades of crude oil processed by the refineries were said to have threatened the capacity of the plants to blend the different grades to derive the required quality of refined products.
The refineries are said to be conscious of the quality and density of crude oil as “crude varies considerably in terms of density, acidity, type of hydrocarbon molecules they contain, and presence of impurities such as sulphur and heavy metals such as nickel and vanadium.”
For instance, if the crude oil contains too much acid or salt, the refinery’s equipment will be damaged by corrosion, while with too many heavy metals, the catalysts that aid refining will be poisoned.
On the other hand, too much sulphur will make the crude too hard to meet specifications for petroleum products.
Also, if the crude oil is of the wrong density, it will be impossible to maximise the efficiency of the refinery’s distillation tower and other units.
The average density of crude oil processed in the US refineries since 1985 has been fairly steady and in statistical terms, the weighted average specific gravity has been 31.1 degrees with a standard deviation of just 0.7 degrees.
But according to EIA’s US crude oil production forecast, analysis of crude oil types released in May 2014, “roughly 96 percent of the 1.8 million barrels per day growth in (domestic) production between 2011 and 2013 consisted of grades with American Petroleum Institute (API) gravity of 40 or above.”
To handle the lighter shale oil, the US refiners need to reconfigure their plants to handle a lighter average blend, but that would take time and involves costly investment.
The simpler option, it was learnt, would be to lift the ban on crude oil exports and allow US refiners to continue to import and refine more of the heavier oil they prefer.