"“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.” "

Chinese premier Wen Jiabao 12th March 2009

""We have a financial system that is run by private shareholders, managed by private institutions, and we'd like to do our best to preserve that system."

Timothy Geithner US Secretary of the Treasury, previously President of the Federal Reserve Bank of New York.1/3/2009

Monday, August 11, 2008

Oil - a declining resource and new refineries a slowly contracting business

No one is going to be building any more refineries.There won't be enough oil left to refine by the time new refineries could pay for themselves.

There hasn't been a new refinery built in the US since 1976. In 1982, there were 301 operable refineries in the U.S and they produced about 17.9 million barrels of oil per day. The last new refinery built in the United States was Marathan Ashland's Garyville, La., plant — and it was completed in 1976. Between 1999 and 2007 total refining capacity in the United States rose only 3 %. This will be expanded it was anounced last week . Marathon Oil Corporation's board of directors approved one of the largest economic development projects ever in Louisiana. This US$3.2 billion expansion of the 30-year-old refinery in Garyville, LA will expand the company's crude oil refining capacity by 180,000 barrels per day.

The refinery currently has 560 direct employees and another 350 full-time contract workers. St. John the Baptist Parish-will receive between $40 and $50 million in sales and use taxes during project construction.

Today there are only 149 refineries, and they're producing 17.4 million barrels.

This increase in efficiency is impressive but not a miracle. As with everything these outputs are carefully calculated to optimize profitability.

New refineries require massive financial commitments which take anywhere from 15 to 25 years to amortize. Resistane to their constructionis active, funded and relentless. With record oil prices it would make perfect sense to invest in a few refineries today, except... for the lack of oil to be refined 20 years from now.

Tradeable oils have reached their peak, oil production is starting on the downward slope.

After 2020, there will be less and less oil to refine no matter where drillers look. In this context, Building expensive new refineries does not make financial sense as existing ones will be sufficient to process whatever little oil is left.

So forget about new refineries, except for a few maybe in the northern midwest to process the heavy oil from Canada and some in the Caucasus and eventually in Iraq and Iran ...eg a US$81-million contract will be awarded jointly to the U.S.-based Colorado Industrial Construction Services Co. (CICSCO) and CH2M HILL's affiliate VECO Co. for the upgrade and production of gasoline from the Samawah refinery(IHT 7/8/08)

Mexico's state-run energy monopoly Pemex who have 6 refineries they constantly upgrade presented a plan on Wednesday (6/8/08) for a new oil refinery with a processing capacity of 300,000 barrels per day of heavy crude.

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