Once crude oil is extracted from the ground, it must be transported and refined into petroleum products that have any value. Those products must then be transported to end-use consumers or retailers (like gasoline stations or the company that delivers heating oil to your house, if you have an oil furnace). The overall well-to-consumer supply chain for petroleum products is often described as being segmented into three components (shown graphically in Figure 2.1).
- Upstream activities involve exploring for crude oil deposits and the production of crude oil. Examples of firms that would belong in the upstream segment of the industry include companies that own rights to drill for oil (e.g., ExxonMobil) and companies that provide support services to the drilling segment of the industry (e.g. Halliburton).
- Midstream activities involve the distribution of crude oil to refiners; the refining of crude oil into saleable products; and the distribution of products to wholesalers and retailers. Examples of firms that would belong in the midstream segment of the industry include companies that transport oil by pipeline, truck or barge (e.g., Magellan Pipeline); and companies that refine crude oil (e.g., Tesoro).
- Downstream activities involve the retail sale of petroleum products. Gasoline stations are perhaps the most visible downstream companies, but companies that deliver heating oil or propane would also fall into this category.
Some companies in the petroleum industry have activities that would fall into upstream, midstream and downstream segments. ExxonMobil is one example of such a firm. Others have activities that fall primarily into only one segment. The KinderMorgan pipeline company is an example of a specialized petroleum firm, in this case belonging to the midstream segment. Many regions have local gas station brands that would specialize in the downstream segment of the industry. One of the best-known regional examples is the WaWa chain of gas stations and convenience stores in eastern Pennsylvania, but large grocery stores and retailers like Costco and Wal-Mart are increasingly involved in downstream sales of petroleum products.
Petroleum refineries are large-scale industrial complexes that produce saleable petroleum products from crude oil (and sometimes other feedstocks like biomass). The details of refinery operations differ from location to location, but virtually all refineries share two basic processes for separating crude oil into the various product components. Actual refinery operations are very complicated. The link below will take you to a 10-minute long video that provides more details on the various refining processes.
Video: Petroleum Refining Basics (10:00)
PRESENTER: For crude oil to be used effectively by modern industry, it has to be separated into its component parts and have impurities like sulfur removed. The most common method of refining crude is the process of fractional distillation. This involves heating crude oil to about 350 degrees Celsius, to turn it into a mixture of gases. These are piped into a tall cylinder, known as a fractional tower. Inside the tower, the very long carbon chain liquids, such as bitumen and paraffin wax, are piped away to be broken down elsewhere. The hydrocarbon gases rise up inside the tower, passing through a series of horizontal trays and baffles called bubble caps. The temperature at each tray is controlled so as to be at the exact temperature that a particular hydrocarbon will condense into a liquid. The distillation process is based on this fact. Different hydrocarbons condense out of the gas cloud when the temperature drops below their specific boiling point. The higher the gas rises in the tower, the lower the temperature becomes. The precise details are different at every refinery, and depend on the type of crude oil being distilled. But at around 260 degrees, diesel condenses out of the gas. At around 180 degrees, kerosene condenses out. Petrol, or gasoline, condenses out at around 110 degrees, while petroleum gas is drawn off at the top. The distilled liquid from each level contains a mixture of alkanes, alkenes, and aromatic hydrocarbons with similar properties, and requires further refinement and processing to select specific molecules. The quantities of the fractions initially produced in an oil refinery don't match up with what is needed by consumers. There is not much demand for the longer chain, high molecular weight hydrocarbons, but a large demand for those of lower molecular weight-- for example, petrol. A process called cracking is used to produce more of the lower molecular weight hydrocarbons. This process breaks up the longer chains into smaller ones. There are many different industrial versions of cracking, but all rely on heating. When heated, the particles move much more quickly, and their rapid movement causes carbon-carbon bonds to break. The major forms of cracking are thermal cracking, catalytic, or cat cracking, steam cracking, and hydrocracking. Because they differ in reaction conditions, the products of each type of cranking will vary. Most produce a mixture of saturated and unsaturated hydrocarbons. Thermal cracking is the simplest and oldest process. The mixture is heated to around 750 to 900 degrees Celsius, at a pressure of 700 kilopascals That is, around seven times atmospheric pressure. This process produces alkenes, such as ethane and propane, and leaves a heavy residue. The most effective process in creating lighter alkanes is called catalytic cracking. The long carbon bonds are broken by being heated to around 500 degrees Celsius in an oxygen-free environment, in the presence of zeolite. This crystalline substance, made of aluminum, silicon, and oxygen, acts as a catalyst. A catalyst is a substance that speeds up a reaction or allows it to proceed at a lower temperature than would normally be required. During the process, the catalyst, usually in the form of a powder, is treated and reused over and over again. Catalytic cracking is the major source of hydrocarbons, with 5 to 10 carbon atoms in the chain. The molecules most formed are the smaller alkanes used in petrol, such as propane, butane, pentane, hexane, heptane, and octane, the components of liquid petroleum gas. In hydrocracking, crude oil is heated at very high pressure, usually around 5,000 kiloPascals, in the presence of hydrogen, with a metallic catalyst such as platinum, nickel, or palladium. This process tends to produce saturated hydrocarbons, such as shorter carbon chain alkanes, because it adds a hydrogen atom to alkanes and aromatic hydrocarbons. It is a major source of kerosene jet fuel, gasoline components, and LPG. In one method, thermal steam cracking, the hydrocarbon is diluted with steam and then briefly heated in a very hot furnace, around 850 degrees Celsius, without oxygen. The reaction is only allowed to take place very briefly. Light hydrocarbons break down to the lighter alkenes, including ethane, propane, and butane, which are useful for plastics manufacturing . Heavier hydrocarbons break down to some of these, but also give products rich in aromatic hydrocarbons and hydrocarbons suitable for inclusion in petrol or diesel. Higher cracking temperature favors the production of ethene and benzene. In the coking unit, bitumen is heated and broken down into petrol alkanes and diesel fuel, leaving behind coke, a fused combination of carbon and ash. Coke can be used as a smokeless fuel. Reforming involves the breaking of straight chain alkanes into branched alkanes. The branched chain alkanes in the 6 to 10 carbon atom range are preferred as car fuel. These alkanes vaporize easily in the engine's combustion chamber, without forming droplets and are less prone to premature ignition, which affects the engine's operation. Smaller hydrocarbons can also be treated to form longer carbon chain molecules in the refinery. This is done through the process of catalytic reforming, When heat is applied in the presence of a platinum catalyst, short carbon chain hydrocarbons can bind to form aromatics, used in making chemicals. A byproduct of the reaction is hydrogen gas, which can be used for hydrocracking. Hydrocarbons have an important function in modern society, as fuel, as solvents, and as the building blocks of plastics. Crude oil is distilled into its basic components. The longer carbon chain hydrocarbons may be cracked to become more valuable, shorter chain hydrocarbons, and short chain molecules can bind to form useful longer chain molecules. [MUSIC PLAYING]
The first process is known as distillation. In this process, crude oil is heated and fed into a distillation column. A schematic of the distillation column is shown in Figure 2.2. As the temperature of the crude oil in the distillation column rises, the crude oil separates itself into different components, called “fractions.” The fractions are then captured separately. Each fraction corresponds to a different type of petroleum product, depending on the temperature at which that fraction boils off the crude oil mixture.
|Boiling Range in degrees Fahrenheit||Products|
|<85||Butane and Lighter products|
|85-185||Gasoline blending components|
|350-450||Kerosene, jet fuel|
|450-650||Distillate (diesel, heating oil)|
|650-1050||Heavy Gas Oil|
|>1050||Residual fuel oil|
|Distillation tower||Process’||Ending Products|
|Diesel Distillate||Diesel Fuel|
|Medium Weight Gas Oil||Cracking Units, Alkylation Unit||LPG Gasoline|
|Heavy Gas Oil||Cracking Units||Motor Gasoline, Jet Fuel, Diesel Fuel|
|Residuum||Coker or nothing||Industrial Fuel or Asphalt Base|
The second process is known as cracking and reforming. Figure 2.3 provides a simplified view of how these processes are used on the various fractions produced through distillation. The heaviest fractions, including the gas oils and residual oils, are lower in value than some of the lighter fractions, so refiners go through a process called “cracking” to break apart the molecules in these fractions. This process can produce some higher-value products from heavier fractions. Cracking is most often utilized to produce gasoline and jet fuel from heavy gas oils. Reforming is typically utilized on lower-value light fractions, again to produce more gasoline. The reforming process involves inducing chemical reactions under pressure to change the composition of the hydrocarbon chain.
The production of final petroleum products differs from refinery to refinery, but in general, the oil refineries in the U.S. are engineered to produce as much gasoline as possible, owing to high demand from the transportation sector. Figure 2.4 shows the composition of output from a typical U.S. refinery.
|Heavy Fuel Oil (residual)||1|
|Liquefied Petroleum Gases (LPG)||2|
Nearly half of every barrel of crude oil that goes into a typical U.S. refinery will emerge on the other end as gasoline. Diesel fuel, another transportation fuel, is generally the second-most-produced product from a refinery, representing about one-quarter of each barrel of oil.