Implications of a Ten Day Refinery Outage

[Extend a Hand]

http://www.theoildrum.com/node/4526#more

Where is our gasoline and diesel supply headed? Even before Ike hit, quite a few areas of the US were starting to see gasoline shortages. The impact of Ike can only make shortages worse. Most likely, it will take refineries at least a week or two to get production back to normal levels after a storm of this type, considering the impacts of electrical outages and flooding. In this article, I will examine some of the issues that seem to be involved. Based on my analysis, fuel supply shortages are likely to last well into October, and are likely to get considerably worse before they get better.

Insight 1. Even before Hurricane Ike hit, inventories were very low.


FIgure 1. EIA Graph of Gasoline Inventories

According to EIA data, gasoline inventories the week that Hurricane Gustav hit were the lowest that they had been since 2000, amounting to 187.9 million barrels, or about 21 days supply. Quite a bit of this inventory is needed just to keep the pipelines filled. EIA does not publish information as to how far inventories need to drop before we start seeing outages, but it is clear that we have now reached the point where shortages are developing.

much more at link.

[ddeclue]

1. We are just so screwed.. 10 days from now we'll be living in Cuba..

time to break out our bicycles...

Doug D.

[spag68]

2. Gas supply's

It will be interesting to me to see what happens to all the crude that piles up waiting for the refineries. There is already a backup of crude supplies and this will make it worse. The best we can hope for is a time when we drive even less. By the way T boone's plan to use nat. gas saves the refinery cost, as all it needs is to be compressed.

[Delphinus]

15. Where does the natural gas come from?

Here in the US or elsewhere?

[Subdivisions]

3. I've been saying for two days that we are seeing actual shortages due to

the supply distribution system being at minimum operating levels. Seems like blaming price-gouging (yes, I know there is gouging) is much more fun than actually going to the trouble of doing the research it takes to know what one is talking about. This country's gasoline infrastructure's minimum operating level is 187 million barrels. That's exactly what we have in supply. THERE IS NO SPARE CAPACITY. And that was before Gustav. We are seeing real shortages. And where supplies are in short supply, with no prospect of new shipments anytime soon, of course there will be those who attempt to capitalize on the situation.

[ddeclue]

4. But the short supplying is INTENTIONAL by the oil companies

They WANT a precarious fragile supply chain that breaks with the slightest of breezes because they can drive the prices into orbit on any excuse.

It is time to nationalize or at least re-regulate the oil biz in this country.

Doug D.

[Subdivisions]

5. Ummm...the reason we have a precarious supply chain is because

we are in the plateau of peaking world oil production. In five years, Mexico will no longer export oil as their production is plummeting, 37% down this year. They are our third largest supplier. When they stop exporting, where are we going to find another third-largest supplier of crude? Add to this the fact that OECD production has peaked, and once Saudi Arabia production peaks, OPEC will also peak. And there's some debate right now as to whether SA is even still a part of OPEC considering they walked out of the OPEC summit the other day. At any rate, world oil production has been on a plateau since early 2005 even as demand and population have grown.

[ddeclue]

6. delete double post

[Subdivisions]

8. Everything you just said is attributable to peaking oil production. OPEC

knows they are on a production plateau and, just like the Export Land Model postulates, they are controlling their output to maximize profits before decline sets in, at which time they will begin to further restrain output as they keep more and more oil "for their children and grandchildren", as stated several months ago by King Abdullah.

Also, it cost's about $4 billion to build a refinery. It takes several years to get it built and fired up. If you knew you would never be able to turn a profit (due to peaking production), would you embark on financing a multi-year project that may never be profitable. I wouldn't.

[ddeclue]

9. Peak Oil is NOT the problem.and 4 billion is a joke to the oil industry

Perhaps you aren't paying attention to just how much money they are making these days.

There is still plenty of oil. Perhaps you aren't aware of the Canadian tar sands or of recent Brazillian finds.

The issue is whether we should continue to use oil because of the ecological damage it is doing to the planet.

The supply is being artificially limited (much as diamonds are) so that the price can be artificially driven up. Market forces are not being allowed to work and it is obvious to anyone who watches the disconnect between events and prices. Causality is totally absent and prices go up (and occasionally down) for totally arbitrary reasons. Prices fall in spite of hurricanes that damage or shut down supplies and then rise for hurricanes that do no damage at all.

The real solution is nationalization or re-regulation along with a plan to get us off of oil altogether for ECOLOGICAL reason, not because of a mythical peak oil theory.

Remember the world is 71% water and we can hardly claim to have looked everywhere for oil so I just don't see how anyone can legitimately prove "peak oil".

Global warming however is a different matter. THAT is the real reason to get off of oil.

Doug D.
Orlando, FL

[ddeclue]

7. Umm...NO.. it is intentional and due to unregulated monopolies in the market.

The supply of oil is NOT the issue.

Production has long been artificially limited by OPEC, a monopolistic cartel which controls supply and the Saudis finally just walked out on OPEC and told them they were going to produce as much as we need so expect crude prices to fall soon - they know that OPEC is pushing the world economy towards economic collapse and they don't want to kill the goose that is laying their golden eggs AND they don't want to drive Western nations to adopt alternative energy sources by pricing themselves so high that renewables actually become cheaper than petroleum

Secondly the issue at hand is REFINING capacity and how it is NOT being expanded to meet consumer demand. The oil refineries are NOT being expanded to meet demand during the last 25 years and this is due to all the oil company mergers. They have reached a point where they no longer have to compete with each other because it is down to a handful of companies rather than several dozen 30 years ago. Therefore they feel no pressure to increase supply of refined products to meet the demand, it's just easier and more profitable to allow shortages to go own. They make MORE money by producing less and spending less.

OPEC must be broken up.

The oil companies must be broken up.

The market place is broken and supply and demand are being distorted artificially.

We need to do more to diversify energy sources and make vehicles operate off of flexible fuel sources. To this end turbine powered vehicles or electrical battery / fuel cell (methanol or ethanol) would be much better as they could be run of off a much wider variety of fuels both petro chemical and bio-renewable.

Doug D.
Orlando, FL

[physioex]

10. I don't understand your alternatives....

How can you make a turbine powered vehicle power a car. It was tried a long time ago and it failed. Turibine engines spin at high rpms, guzzle lots of fuel, and do not produce any low end torque.

Where do you suggest we get these methanol/ethanol from? Definitely not from corn as it effects the price of food. And it takes a lot of agricultural resources to grow the corn including petroleum based fertilizers.

How do you suggest we "break-up" OPEC. We are the drug addicts looking for a hit.

[ddeclue]

16. That was then..this is now...

The trick to making gas turbines work is to make it a turbine-hybrid vehicle.. use the turbine to power an electric generator at a more or less constant load to charge a battery bank and use electric motors to drive the wheels. Electric motors have phenomenally good torque curves even at low RPMs.

The problem with the 1960's based turbine vehicles is that they always tried to use mechanical transmissions between the engine and the wheel. Not very efficient to gear down as you point out and hard to throttle them up and down for the demands of city driving. The electric motor battery hybrid model solves that problem and it is MORE thermodynamically efficient than existing hybrids and MORE flexible w.r.t. fuel choice.

Other nice features will be that they are naturally quieter and that the engines will last forever for all intents and purposes. In aviation applications, piston engines require overhaul between 1500 and 2000 hours depending on the model. Turbine engines routinely go 20,000, 30,000 or more hours between overhauls.

The engines will also be safer if you use fuels other than gasoline or alcohol. Kerosene and diesel or bio-diesel are much harder to accidentally ignite.

The hybrid approach I propose also allows these vehicles to function as purely electric rechargeable for short distance daily commutes and they could also double as back up generators for households in the event of natural disaster, terrorism, or other utility failure scenarios. If you had a 50kW to 100kW turbine, it could easily power your house and 10 of your neighbors completely.

The nice thing about turbines is that they don't really care a lot WHAT they burn, you could run them from kerosene, diesel, gasoline, ethanol, methanol, natural gas, rubber bands, plastic spoons (I exaggerate but you get the point). The fuels could be either petro based or from renewable agri sources.

This fuel flexibility feature and the electric hybrid nature of my concept which allows the vehicles to function on shorter runs as pure electrics will force the various energy companies to actually compete against each other and will allow the widest possible variety of energy sources to power our vehicles: traditional petro-chemical, agri-renewable, solar electric, nuclear, hydro, wind, geo-thermal, landfill recovered natural gas - whatever floats your boat...

This approach will truly put the power over energy costs back into the hands of the consumers in a way it simply is not today.

Regarding landfill methane as a fuel source, one thing people don't realize is that our landfills are contributing huge amounts of methane to the atmosphere every year which is actually a far more potent greenhouse gas than CO2. It would be better to convert it to CO2 than to allow it to escape into the atmosphere unburned and then burn something else to create CO2 on top of that so that we could power our vehicles.

As for corn, it is being misused in food stock anyways. It is being used to create corn syrup sweeteners which are making us all fat and causing health problems. It is also being used to feed livestock which is also very inefficient.

Sugar cane seems to be the best solution based on Brazil's experience and right now the gov't subsidizes sugar growers to keep the price artificially high and keep them in business. US sugar prices are 5 times the world market price.

Methanol for fuel cell vehicles can be produced from just about any cellulose source including fast growing tree varieties like hybridized lob-lolly pines.

Further down the road, methanol fuel cell holds great promise and will be even more efficient since it utilizes electro-chemical and not thermodynamic processes. Instead of 40% efficiency of a turbine set up you easily could be seeing up to 70% efficiency for MFC processes.

Hydrogen fuel cells are supposed to be the so called "magic bullet" to global warming but in reality they pose many problems that MFC or turbine-hybrid do not:

Cryogenic fuel handling is something that hardly anyone outside of NASA, the military, and major chemical companies do today. It is hard to imagine average Joe drivers doing it routinely.

Hydrogen is difficult to produce and the only way to produce it without generating greenhouse gases would be through electrolysis powered by nuclear, solar, hydro or wind power.

It takes a lot of energy to liquify the hydrogen and it is difficult to store any significant quantity of it because it is so light, about 1/8th the density of water even in liquid form.

Methanol is very similar to gasoline in terms of handling so distribution infrastructure would be much easier to adapt and/or implement than for hydrogen.

I hope you understand my POV better now..

Douglas J. De Clue
Bachelor of Aerospace Engineering,
Georgia Tech

[progressivebydesign]

11. Most sane post on all of this -- and let's not forget the speculators!

They make a bad situation worse by artificially driving up the prices based on rumors.

[ColbertWatcher]

13. Can't it be both? n/t

[crimsonblue]

12. This is why we have a SOR

but with the dumbfucks in office, of course they won't use it. The gov't needs to use the reserves whenever necessary to keep output at a baseline level.

[radfringe]

14. there are also 2 oil platforms floating lose in the Gulf

remember this quote when we are paying through the nose at the gas pump:

In an energy speech recently, McCain said that: "As for offshore drilling, it's safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston."

The hurricanes totally destroyed 113 oil rigs, according to the government's Minerals Management Service, and damaged 457 pipelines. The resulting oil spills were large enough to be seen from space, according to several reports. - Washington Post http://blog.washingtonpost.com/the-trail/2008/07/23/mccain_and_the_safety_of_offsh.html

[magellan]

17. McSame lying again. He's hoping his crowd is ignorant of the facts

...and for the most part they are.

Just reported again on ABC Houston: a number of platforms and pipelines to refineries have been damaged by Ike. No solid numbers yet, but the anchor remarked "a number is probably MORE than less".