Petroleum Economics - Factors Affecting the Refiner's Choice of Crudes

The application of the law of supply and demand to the sale of crude oil is generally conceded, but the motives underlying the buyer's (refiner's) demands are not always obvious to the seller (producer). In some cases this obscurity has led to the conclusion that the refiner may be unnecessarily particular when he selects one crude and rejects another. This preference, however, is very largely the reflection of the refiner's product demands and the quality of the stocks obtainable from the selected crude. The purpose of this paper is to point out critical characteristies of the major classes of refined products and to show how crudes vary in their suitability for such products. With relatively few exceptions, available processing methods and addition agents make it theoretically possible to produce any type of refined product from any crude source, although it may not be economically sound to do so. The widespread application of thermal cracking for converting higher boiling stocks into gasoline is well known. More recently cracking and refining in the presence of catalysts9 have been developed, as well as various processes for polymerizing lighter hydrocarbons into gasolines having desirable characteristics.6 For several years, selective solvents have been applied commercially to refining inferior quality kerosene, Diesel fuel and lubricating oil distillates.3 Improved methods for refining lubricating oils from crude residual4 formerly suitable only for fuel, are now in use and a number of special solvent processes are available for dewaxing lubricating oils to low pour point.5 These improved refining methods have been developed not only to meet the demand for improved product quality but also to enable the refiner to obtain quality products from crude sources that would not yield such products by the older refining methods. In many cases, the utilization of these modern refining tools necessitates an appreciable expenditure for equipment as well as added manufacturing costs, and their application therefore must be justified economically. Despite the availability of such tools, the added processing costs involved and yields obtainable may render their application entirely impractical. To illustrate this point, inspections of typical cuts from various crudes