US needs more refinery capacity
As crude oil production in the United States continues to grow, the back-ups it is creating for domestic refineries are becoming more apparent.
Booming production in new plays, like the Bakken Shale in North Dakota, have led to record storage at Cushing, Ok., one of the major hubs for crude oil.
Crude oil production increased almost 14 percent in the last year alone, according to the American Petroleum Institute. But domestic demand is dropping and US crude cannot be shipped to foreign refineries because of an export ban.
While many are calling for more pipelines to solve the storage issue, the best long-term solution is to build new refineries, said Bernard Weinstein, associate director of Maguire Energy Institute, at a Thursday morning breakfast.
“I think the ultimate solution to Cushing is to build more refining capacity,” Weinstein said, noting that there has not yet been a major new refinery built in the US since the 1960s.
The challenge for new refineries is both political and economic Weinstein said, listing a range of local, state and federal regulatory requirements a new refinery must meet in order to operate, from air emissions to required use of biofuels to water quality issues.
Shale oil: Domestic crudes put U.S. refineries in a sweet spot
Finding a location is another difficulty, given community opposition to new refineries, Weinstein noted.
“It’s the whole not-in-my-backyard phenomenon,” Weinstein said. “The challenge is finding a place where the community is accepting and you meet all the refinery standards. It probably is easier in Texas or Louisiana, where you have a 100 year history of refining, than in New Jersey or Massachusetts.”
...Areas that don't want refineries will have to pay a higher price for fuel. They may find that OK up to a certain point anyway. I think we need a combination of pipelines and more refinery capacity and we also need to abandon the ethanol requirements that drive up the cost of fuel and food.