The Energy Information Administration released a report this week saying there are “several different ways” U.S. refineries can handle the higher volume of domestic crude, brought about through the shale revolution: a viewpoint AFPM has long held and voiced through speeches, interviews, Congressional testimony, and most recently in our 2015 Crude Capacity Survey.

The agency’s report focuses on the technical aspects of processing the higher volumes of light, tight oil (referred to as LTO in the report) – the majority of which is being produced at the Bakken and Eagle Ford shale plays. In its executive summary, the EIA report states that “there is significant potential for further growth in domestic LTO production,” adding: “There are several different ways that U.S. refiners could process additional volumes of LTO.”   

This sentiment is echoed in AFPM’s 2015 Crude Capacity Survey, which states that the refiners that responded to our survey would have additional capacity of 800,000 barrels per day on top of the planned increase of light tight oil usage by 730,000 barrels per day already anticipated by our respondents:

“The survey indicates that the respondent industry subset has more than enough processing capability to absorb all new U.S. super light oil production that the Energy Information Administration (EIA) is projecting through 2016.”

EIA’s report acknowledges that many of the minimal-cost options to absorb these higher crude volumes have already been adopted by refiners, but many more options remain on the table. Although these options may be slightly pricier, the industry will be spending $5 billion between 2013 and 2016 to handle the extra crude – and, as AFPM President Charlie Drevna noted during recent Congressional testimony, these expansion costs form only 10 percent of the refining industries’ capital expenditure budget over that period.

AFPM Communications

Posted by AFPM Communications

AFPM Communications provides insights from inside AFPM. To learn more about AFPM, visit AFPM.org.