No new refineries ever in US

Chevron (NYSE:CVX) CEO Mike Wirth said Friday that he does not expect another oil refinery will be built in the U.S. ever again, due to decades of federal government policies.

“We haven’t had a refinery built in the United States since the 1970s. My personal view is there will never be another new refinery built in the United States,” Wirth said in an interview with Bloomberg.

“You’re looking at committing capital 10 years out, that will need decades to offer a return for shareholders, in a policy environment where governments around the world are saying we don’t want these products,” Wirth said.

https://seekingalpha.com/news/3845705-no-new-refineries-like…

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at consistent 90% utilization, they can build refineries to retire the old one. Blaming politicians is just an excuse. They just want to keep the supply tight, because they are not sure about demand. Just because politicians “say no to drugs” didn’t stop its use. Gasoline is a needed product, there is demand. It is a business decision that is dictated by economics rather than politics.

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Blaming politicians is just an excuse. They just want to keep the supply tight, because they are not sure about demand.

Nor should they be sure about demand. Refining profits are very cyclical with many inputs out of their control, and it would be insane, particularly in today’s environment, to invest more money into new infrastructure based on an up cycle while ignoring the down. You can’t scream it’s time to eliminate petroleum products, threaten lawsuits comparable to those against the tobacco industry, and then expect a refiner to throw money at infrastructure designed to lower their profits.

Refiners were badly hurt during Covid, to the point where we were concerned that our pensions were at risk and we took a lump sum. Many are still licking their wounds and have a lot of losses to make up. These are for profit companies and should be more concerned about their bottom line than yours.

IP

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Refining profits are very cyclical with many inputs out of their control

Fallacy. Refining is a margin business, input costs impact only couple of quarters to flush through the system. It is like pipelines.

Refiners were badly hurt during Covid, to the point where we were concerned that our pensions were at risk and we took a lump sum

COVID is an outlier. You cannot take that to justify the lack of investments of the past 2 or 3 decades. No, the refining industry didn’t know or predicted COVID, or a factor in their business model. The major reason is not even politicians screaming. None of the politician screaming has stopped COKE and Pepsi or any fast food companies.

Lot of folks conveniently forget, that SHALE boom and Saudi Arabia in response dropping the price to bring the US energy companies to its knees, etc.

Oil is a global commodity, with geopolitics thrown into that mix.

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Dont forget that zero carbon means oil is a dying business. You are asking investors to spend years getting permits, invest billions to build, and it may be obsolete or redundant when completed. Not a very good investment.

More likely as renewables get built the least efficient refineries will shut down.

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Dont forget that zero carbon means oil is a dying business. … as renewables get built …

The wind doesn’t always blow.
The sun doesn’t always shine.
Oil and gas will always burn.

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Dont forget that zero carbon means oil is a dying business.

Zero carbon is not reality, at least right now. So, it is an excuse.

“Don’t forget that zero carbon means oil is a dying business.”


Again, as Mark Twain reminds us,“The reports of my death are greatly exaggerated”

This link graphically shows oil & nat-gas alive & well with continued growth thru 2040…

https://www.visualcapitalist.com/the-worlds-projected-energy…

ciao

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Zero carbon is not reality, at least right now. So, it is an excuse.

Do you make your financial decisions only on the here and now, without taking the future into consideration? I can see that if you are a trader, rather than an investor, but when dealing with the financials of massive companies, they need to look to future compensation for investments made today.

IMO the reluctance of further investment in an industry that is under pressure is an unintended consequence of all the wagging of the fingers at “big oil.”

IP

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and a little info on where we got our energy imports last year…

https://www.visualcapitalist.com/visualizing-u-s-oil-imports…

ciao

Do you make your financial decisions only on the here and now, without taking the future into consideration?

Define future? Assuming you can recover your investment in a refinery in 30 years, yes that is “here and now”, future as in next 100 years, there are no such guarantee’s.

Take XOM, the shareholders revolted and put in a phony “Green activists” in to the board, so that they can ensure the dividends are continued and the money is not diverted to “investments”.

From government investment to private investment, baby boomers selfishness is screwing up this country big time.

Zero carbon is not reality, at least right now.

New refinery is not reality either. If project is authorized today, 2030 is likely completion date.

What will oil demand be in 2030? Agreed it won’t go away. But could be a fraction of today.

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The wind doesn’t always blow.
The sun doesn’t always shine…

FWIW
My latest favourite cool “out there” solution for very large scale grid storage.
https://heindl-energy.com/

My own bad precis of their approach:
Find a location with reasonably hard rock, about 46% of land locations, near where you want your battery storage.
Flat land is fine.
Cut a ring shaped trench in the rock. A BIG one. Storage capacity rises with something like the fourth power of the diameter, but construction cost doesn’t.
Then undermine it at the bottom, to completely separate a huge cylinder of rock from the surrounding rock.

Then:
Too much power on the grid right now? Pump high pressure water under the giant cylinder of rock, lifting it.
Too little power on the grid right now? Use the high pressure water under the cylinder to run generators, letting the cylinder fall.
You need a reservoir for the water, but not a very big one. The high pressure reduces the requirement enormously compared to conventional pumped hydro storage. (40-70 bar)

This requires a lot of very advanced technologies. Mining, rock sealing, pumping, generation, flexible rolling seals.
But, rather remarkably, they have all already been developed for other purposes.
It doesn’t require very much land relative to the energy storage, no exotic/toxic/rare/expensive/inflammable materials, and a cylinder of rock won’t wear out.

Jim

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Oil is a global commodity, with geopolitics thrown into that mix.

Kingran

Can you explain why you are discussing oil price when the thread is about refineries? Why do you think the price of oil influences the profit of refineries?

Craig

Oil and gas will always burn.

Very easy to say, but at what quantity?? Your ten year and 20 year projection for oil and gas production would be interesting to see. Increasing, constant or decreasing??

Craig

This link graphically shows oil & nat-gas alive & well with continued growth thru 2040…

https://www.visualcapitalist.com/the-worlds-projected-energy…

The graphical link at the top of the post shows scenario 1 which supports more oil production. Further down is scenario 2 which is dramatically different showing a substantial decrease in oil production. The post says both scenarios are equally likely.

Craig

FWIW, the “refinery” definition applies to facilities (and expansions) of over 50,000 BPD. There are many ‘stabilizer’ facilities permitted, planned, in progress, under construction and recently in service.

As we continue our unconventional production, we will continue to build adjacent ‘stabilizers’.

They function in almost every single way in the same way other refineries work, with one exception:

They do not handle imported oil.

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A stabilizer takes crude and heats it up to take out the light ends (nat gas, NGLs). It is not creating end use products (gasoline, diesel). We put the crude (and condensate) through a stabilizer to reduce the vapor pressure so it can be shipped on long-haul pipelines, and/or sold to refiners.

Perhaps you meant splitters:

What is a splitter in oil and gas?

Splitters – a basic distillation tower – give condensate a minimal level of processing by refining oil into byproducts, such as naphtha, that can be exported to refiners and blenders.

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