Energy Industry Positioning for Endgame

ExtractionEngineer

mos6507,
You are correct. Many of the U.S. majors have a lot of heavy crude refining capacity. That goes back to what I said earlier in the thread...it seems like some top level strategists knew what would be happening now...over a decade ago. For instance, who do producing companies typically call when they need engineering expertise for refining heavy crude. Conoco Phillips. They've converted over much of their "standard" refineries in the U.S. to handle heavy crude. Recently they were in a partnership with Venezuela to build a heavy crude refinery....of course once it got far enough along Chavez invited COP folks to leave the country. As some of you know, they are currently doing a similar project with Aramco.

So not only have some top level industry folks been aware that there was a limit to growth...and approximately where it was. They were aware that there would be a shift in the quality of product available. This is nothing new in the free market, though, if someone is making money at it...pay attention to their actions...not their words.

TheDude

ExtractionEngineer - amazing stuff. I'd heard some anecdotes about US refineries adding cokers in Refining 201: The Assay Essay, but the comments there make it sound as if the refiners are just responding to the new influx of heavy oil on an ad hoc basis - are there other indicators that they've been going in this direction for a while as you suggest?

Incidentally, the author of that article, Robert Rapier, is ex-Conoco Phillips.

I keep wondering when the titans of business will wake up to how serious an issue this is; it's been suggested that the producing nations (and the majors?) may have sincerely believed it would be a simple matter to transition away from oil, but are waking up the reality of the situation. Maybe they're optimists by definition? Or they simply never looked at the big picture. Or just didn't care.
_________________
Cogito, ergo non satis bibivi
C'mon man, who're you gonna believe?

keehah

Thanks for the info. In the same vein I've heard too this week that our 'leaders' may finally be looking for more than more kool-aid.

Just had a chat with someone back from Washington. Senate members paraded through and did not interact but he did have some discussion with others, including from the Department of Energy.

Apparently the word is some of the polios are starting to realize the energy problem is going to take-up some of their grey matter. Senators in the future are 'not to just believe the stuff' when alternative fuel corporate salespersons present to them. They realize they did this with ethanol and "got burned" and in the future will be more concerned about business "over promising" with alternative technology.

ExtractionEngineer

Dude,

Capacity is probably being added on an ad-hoc basis to some extent. The main piece of evidence to support the position of "they have known for years" would be the fact that they have had access to the same EIA and IEA demand projections we have had. If they didn't know something was up why weren't/aren't they ramping up refining capacity to handle all of the new supply we will need to refine to meet demand.

I suppose the argument could be made that they were "regulated" out of that business by the fed gov...I don't know...haven't looked at the economics. Seems like if that were the case, though, we would have seen some hard numbers from the majors since they have been taking so much heat for low refining capacity.