Oil Refining in the United
States
DANIKA HASHER
Brief History of the PES refining
complex
Point Breeze Refinery was built in 1866 by Atlantic Petroleum Company and they
produced Kerosene
1918 Gasoline & aviation fuel was being produced and sold
1920 Gulf Oil built Girard Point Refinery
During WWII both refineries were producing 69,000 barrels a day
1966, Atlantic Refining Co. and Richfield Oil Co. became ARCO.
1982 Gulf became Chevron, and Girard Point became the Chevron USA
Philadelphia refinery.
SUNOCO bought out Atlantic in 1988 and in 1994 Chevron with the plan to
consolidate both refineries
2012 Carlyle Group and SUNOCO became Philadelphia Energy Solutions
The complex is the largest on the East Coast and processes 335,000 barrels a
day
PADD
Originally used for
rationing gasoline
during WWII
Now used to track the
movement of crude oil
and petroleum
product movement
throughout the US.
This system is helpful in
understanding refinery
economics
History of Oil Refining
In the 20th century oil became the preferred energy source because
petroleum is so flexible
The prior energy sources, whale oil and coal, were more expensive to
produce when compared to the production of kerosene
Advancing technology and the discovery of crude sources made
production easier.
WWI helped cement oil as a critical military asset
In the early stages natural gas was just flared off instead of being
processed
History continued…
The big three companies- ExxonMobil, BP, & Shell
Rockefeller Standard Oil ExxonMobil
Royal Dutch Petroleum Royal Dutch & Shell Transport and Trading Shell
Anglo-Persian Oil Company British Petroleum (BP)
With the discovery of the Spindletop field in TX companies like Texaco and
Gulf were created and the US was given an advantage in the Gulf
The seven sisters are: Exxon, Mobil, BP, Shell, Texaco, Gulf, & Chevron
Impact of OPEC
Created to hinder the Western companies and drive prices down
Members include: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya,
Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.
The creation of OPEC has shifted the pricing and production from Western
companies
Control 73% of production of gas and oil
Crude Sources
Crude Sources Continued
Crude oil comes from many countries around the world
Refineries have departments that buy and sell crude that seems to be the
most economical for the company
Domestic crude can be expensive because of the Jones Act (1920)
mandates that any goods shipped between US ports is done so in a ship
with an American Flag, nowadays these ships are few and far between
making it to hard to ship crude from the gulf up to the east coast.
Its easier for refineries in the gulf to get domestic crude because of
pipelines that come from the Dakotas, along with crude extracted in the
gulf itself
Product Markets
Most of the Diesel fuel produced here in the United States gets shipped
over to Europe
This is because US refineries have the capacity to produce low sulfur Diesel
This is also paired with the fact that Europe mainly uses a low sulfur Diesel
Today gasoline is worth very little and all the money is being made off of
Diesel
The way that all the money is made off of crude is determined off of the
amount of cracks they can get, and the goal is to get more of the higher
earning products
Different types of
Gasoline
required
Future of the Industry
Fracking will be even bigger than it is now because of advancements in
technology
Alternative ways to run and produce natural gas will be explored in refineries
The US will be shifting from being a big oil importer to being an exporter with the
discovery of vast fields of Bakken crude in the Dakotas
Pipelines that connect the east coast with the flow of crude from the Midwest
will make it cheaper to run
Lower ppm requirements will go into effect of products making them greener
Even if they aren’t fully put into effect with todays administration there is still an
incentive through RINS taxes/credits for refiners to hit this limit
Works Sited
Oil, economic growth and strategic petroleum stocks. (2014, November 07). Retrieved from https://www.sciencedirect.com/science/article/pii/S2211467X14000443
Energy is Powering Environmental Progress. (n.d.). Retrieved from https://www.api.org/news-policy-and-issues/state-of-american-energy/soae-environmental-progress
U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (n.d.). Retrieved from https://www.eia.gov/environment/emissions/carbon/
Reformulated Gas. EPA,(1999) https://nepis.epa.gov/Exe/ZyPDF.cgi/00000FG5.PDF?Dockey=00000FG5.PDF
Tier 3. EPA (2010) https://nepis.epa.gov/Exe/ZyPDF.cgi/P100HVZM.PDF?Dockey=P100HVZM.PDF
Crude Oil Markets and Production. (2015). Investing in Energy, 65-74. doi:10.1002/9781119204442.ch7
U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (n.d.). Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=4890
EIA Crude imports(n.d.). Retrieved from https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRIMUS1&f=M
Invention and Innovation in the Petroleum Refining Industry. John L. Enos (1962) https://www.nber.org/chapters/c2124.pdf
PES Philadelphia Refining Complex. (2018). Retrieved from http://pes-companies.com/refining-complex/history/
Jeff, Aby, & Lola. (2018). Oil 101 - History of Oil - A Timeline of the Modern Oil Industry. Retrieved from https://www.ektinteractive.com/history-of-oil/
U.S. Energy Information Administration - EIA - Independent Statistics and Analysis. (2017). Retrieved from https://www.eia.gov/tools/faqs/faq.php?id=29&t=6
Where Our Oil Comes From. (n.d.). Retrieved from https://www.eia.gov/energyexplained/index.php?page=oil_where
Radcliffe, B. (2018, April 17). The Jones Act. Retrieved from https://www.investopedia.com/terms/j/jonesact.asp
