OIL SUPPLY 241
oil produces one barrel of refined fuel. Although this is not precisely true, it serves as an easy means for calculating refinery crack
spread.
Furthermore, approximately 10% of the petroleum produced
worldwide is converted to petrochemicals, with most of the balance used for transportation fuels. The fundamental feedstocks
used to produce petrochemicals from crude oil are refinery byproducts LPG and naphtha, and a smaller quantity of natural gas production byproduct natural gas liquids (NGLs). NGLs are primarily
composed of ethane, propane, butane, pentane and some hexane.
These fundamental petrochemical feedstocks are converted primarily to olefins, including ethylene, propylene, butadiene and
butylène, and aromatics, including benzene, toluene and xylenes,
through the processes of steam cracking and catalytic naphtha
reforming to produce petrochemical derivatives (monomers and
polymers).
The bitumen and synthetic crude oil form the Canadian tar
sands also provide the potential for contributing some byproducts
that could be used as petrochemical feedstocks. Bitumen upgrading processes, or delayed coking, gasification, hydrocracking, and
hydroprocessing, produce the same starting materials for producing petrochemicals. Syngas produced from gasification could also
produce hydrogen, ammonia, methanol, oxo-alcohols, FischerTropsch liquids, and their derivatives.
In terms of pricing, tar sand bitumen is priced at a slight discount
to Canadian heavy crude oil (less than $1 per barrel discount), while
Canadian heavy crude oil is priced on average at a $10 per barrel
discount to a mixture of conventional Canadian light and medium
crude oils. However, the fragile nature of tar sands profitability was
obvious during a period of rapidly falling crude oil price declines
(Pavone, 2009). Total's oil sands project, named Joslyn, requires
an oil price of just below $90 a barrel to achieve a 12.5% internal
rate of return, while Total's developments in the deep waters off
Angola need about $70 a barrel. Similarly, production of tar sand
bitumen by in situ methods (mostly steam-assisted gravity drainage — SAGD — and cyclic steam stimulation - CSS) may meet economic restraints. It is, nevertheless, dependent upon the price the
consumer is willing to pay for stability of supply to offset the fragile supply infrastructure that is often subject to political constraints
and manipulation.
oil produces one barrel of refined fuel. Although this is not precisely true, it serves as an easy means for calculating refinery crack
spread.
Furthermore, approximately 10% of the petroleum produced
worldwide is converted to petrochemicals, with most of the balance used for transportation fuels. The fundamental feedstocks
used to produce petrochemicals from crude oil are refinery byproducts LPG and naphtha, and a smaller quantity of natural gas production byproduct natural gas liquids (NGLs). NGLs are primarily
composed of ethane, propane, butane, pentane and some hexane.
These fundamental petrochemical feedstocks are converted primarily to olefins, including ethylene, propylene, butadiene and
butylène, and aromatics, including benzene, toluene and xylenes,
through the processes of steam cracking and catalytic naphtha
reforming to produce petrochemical derivatives (monomers and
polymers).
The bitumen and synthetic crude oil form the Canadian tar
sands also provide the potential for contributing some byproducts
that could be used as petrochemical feedstocks. Bitumen upgrading processes, or delayed coking, gasification, hydrocracking, and
hydroprocessing, produce the same starting materials for producing petrochemicals. Syngas produced from gasification could also
produce hydrogen, ammonia, methanol, oxo-alcohols, FischerTropsch liquids, and their derivatives.
In terms of pricing, tar sand bitumen is priced at a slight discount
to Canadian heavy crude oil (less than $1 per barrel discount), while
Canadian heavy crude oil is priced on average at a $10 per barrel
discount to a mixture of conventional Canadian light and medium
crude oils. However, the fragile nature of tar sands profitability was
obvious during a period of rapidly falling crude oil price declines
(Pavone, 2009). Total's oil sands project, named Joslyn, requires
an oil price of just below $90 a barrel to achieve a 12.5% internal
rate of return, while Total's developments in the deep waters off
Angola need about $70 a barrel. Similarly, production of tar sand
bitumen by in situ methods (mostly steam-assisted gravity drainage — SAGD — and cyclic steam stimulation - CSS) may meet economic restraints. It is, nevertheless, dependent upon the price the
consumer is willing to pay for stability of supply to offset the fragile supply infrastructure that is often subject to political constraints
and manipulation.