The Situation

Petroleum refining is a huge industry – every day the world consumes more than 84 million barrels of refined products with a value in excess of $8 billion. Despite the size of the industry, refiners today confront a difficult environment: they need to increase capacity to meet growing worldwide demand for transportation fuels; they are forced to process heavier crude oil with greater sulfur content because of dwindling supplies of high-quality crudes; and, at the same time they are under pressure to maintain profit margins in a highly competitive commodity industry.

To increase capacity, refiners are expanding their existing refineries and building new refineries. The cost and lead time for capital projects like these has almost doubled over the past five years and it has become nearly impossible to get permits to build new refineries in the U.S. To address the shortage of high-quality crudes, refiners are forced to pay a premium for feedstocks or revamp their refineries to process low quality crudes, which can be difficult to do profitably.

These market conditions are straining the ability of refiners to maintain the profit margins required to support new investments in refining infrastructure. As a commodity business with no control over the cost of crude oil or the prices of its refined products – these are set on the open market – the only levers the refiner controls are the value of the products it produces and the efficiency with which it converts crude to products.

All these factors have created an extraordinary need for new refining technology that enables refiners to increase production of transportation fuel, to process less desirable and less expensive crudes, and to maximize the value of its products, all without making major capital investments.