For the past few years, the story of the U.S. energy boom has been one of rapidly expanding production. But when it comes to turning this crude oil into useable products, there is still much more to be done. Now, U.S. refineries need to keep up with increased demand.
It's a tall order. According to a recent article on CNBC, there are fewer than 150 refineries in the U.S., and a new one has not been built in more than 30 years. Even then, certain facilities are better at handling different types of crude oil, meaning that effective processing capacity nationwide is even lower. Bob Greco, director of upstream operations for the American Petroleum Institute, noted that some refineries are better at handling light sweet crude, while others are more suited for heavier types of oil.
The good news for existing refineries—especially those located on the East Coast, is that increased production is more than enough to keep them in business.
"Those were ready to close on (the) East Coast…but the influx of Bakken shale has been economic for them," Greco said, adding that it would lead to billions of dollars in planned refinery upgrades. "The market will match crude oil to demand and to refineries that can best utilize it."
However, it has become increasingly clear that more refineries will need to be built if increased crude oil production is going to have an effect on consumer prices, particularly at the pump. There are, of course, environmental risks associated with such a project, but stakeholders can work with environmental consultants to minimize them.