Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Issues in FocusEPA has developed new environmental rules that willrequire refineries to reduce the amount of sulfur inmost gasoline to 30 ppm by 2006, from over 400 ppmin the early 1990s, and the sulfur content of highwaydiesel fuel to 15 ppm by October 2006, from over 2,000ppm before 1993. By 2014, virtually all diesel fuelmust be below 15 ppm [29] (Figure 15). To meet thesespecifications at the pump, refiners must produce dieselcontaining one-half that amount of sulfur before itenters the distribution system, because the lowsulfurproduct is expected to pick up trace amounts ofsulfur as it moves through pipelines and other distributionchannels.To meet higher quality standards with poorer qualityfeedstocks will require significant investment by U.S.refiners. The principal method for reducing sulfurcontent in fuels is hydrotreating, a chemical processin which hydrogen reacts with the sulfur in crude oilto create hydrogen sulfide gas that can easily beremoved from the oil. Hydrotreaters are specializedfor the refinery streams they process. In aggregate,the dramatically lower sulfur specifications for petroleumfuels will necessitate a doubling of U.S.hydrotreating capacity by 2030, to 27 million barrelsa day, from 14 million barrels a day in 2004. Most ofthe new capacity (23.4 million barrels a day) isexpected to be installed by 2015 (Figure 16).the refinery. Extra heavy oils, like those from theOrinoco region in Venezuela or the Alberta tar sandsin Canada, are typically upgraded in a process that isboth capital- and energy-intensive but can yield ahighly desirable product. Canada’s Syncrude SweetBlend produced from tar sands is a high-quality syntheticcrude (syncrude) that trades at near paritywith WTI; however, the cost of the upgrades is almost$15 a barrel, in addition to the cost of tar sandsrecovery.The second approach is to “convert” heavy oil at therefinery directly to light products, in a process moretypical of the refining process for conventional oils.Chief among methods of conversion is thermal coking,in which heavy oil from a vacuum distillation unitis fed to a heating unit (coker) that splits off lighterhydrocarbon chains and routes them to the traditionalrefinery units. The almost pure carbon remainingis a coal-like substance known as petroleum coke.The accumulated coke can be removed from thecoking vessels during an off cycle and either sold,primarily as a fuel for electricity generation, or usedFigure 14. Purvin & Gertz forecast for world oilproduction by crude oil quality, 1990-2020(million barrels per day)100HistoryProjectionsLow maximum sulfur specifications may also haveimplications for products not directly affected by thepending EPA rules. Suppliers of such high-sulfurproducts as jet fuel, home heating oil, and residualfuel may have to find alternative distribution channelsif pipeline operators concerned about contaminationstop accepting high-sulfur fuels.As for adapting to heavier crude slates, there are twobasic approaches. The first is to “upgrade” the oil to alighter oil in the producing region, before it is sent to8060402001990 1995 2000 2005 2010 2015 2020High TANHeavy sourLight sourLight sweetFigure 15. Sulfur content specifications for U.S.petroleum products, 1990-2014 (parts per million)3,000HistoryNonroad dieselProjectionsFigure 16. U.S. hydrotreating capacity, 1990-2030(million barrels per day)30 History Projections252,000Highway diesel20151,000Traditional gasoline10Reformulated gasoline01990 1995 2000 2005 2010 2014501990 1995 2000 2004 2010 2015 2020 2025 203040 Energy Information Administration / Annual Energy Outlook 2006