US shale oil is starting to ruin refineries around the world

Close cooperation between many European refineries and American suppliers and the replacement of heavy grades of Russian oil with raw materials from overseas has begun to harm enterprises on the continent, OilPrice writes.

As Permian Basin oil producers deplete prime Category I sites amid sharp production growth in recent years, Category II drilling sites typically produce oil with different characteristics, often lighter than typical WTI Midland.



U.S. light crude is winning over consumers around the world because of its low sulfur content and similar refining quality to other light crudes from the North Sea and Africa. However, its petrochemical profile is harmful to many refineries around the world.

Recent tests have shown that WTI Midland has a density of between 825 and 850 kilograms per cubic metre, anonymous sources familiar with the confidential data told Reuters. That range is within Platts WTI Midland specifications of 0,2% or less sulphur and a density of at least 823 kilograms per cubic metre on the international scale, but the density is already at the lower end of the range and will soon be critically out of line.

According to a new study, the lighter Permian crude gets (lower densities), the more likely it is to be categorized as ultra-light, which will fundamentally change the way refineries process it. Otherwise, it will damage refinery infrastructure and change the characteristics of the final product. Some refiners in the EU and Asia have already found this out by relying on traditional US suppliers without checking new shipments in advance.

Refineries may need to blend ultra-light crude oil with heavier grades to process it into its major products: gasoline, diesel and jet fuel.

Or companies may have to invest heavily in upgrading refineries and converting crude processing units to process ultra-light oil. Obviously, both options are quite expensive and will lead to cost reductions, falling margins and, ultimately, profits for the industry as a whole.

Against the backdrop of the emerging crisis in the raw material processing sector, new problems with American oil may reduce demand for it to a minimum, experts believe. Research is currently being conducted and emergency measures are being taken to prevent a sharp drop in the density of the original raw material.