One of my friends recently asked me, “Is the refinery deal, real?” So, I asked around, and I am hereby sharing my interesting finds.
First question: What does refining mean. In oil refining industry lingo, it’s no hocus-pocus, it simply means boiling oil…
You know from your experience in the kitchen that if you heat water in a pot on the kitchen stove to its boiling point, it means the water temperature reached 100 degrees Celsius. Right? Then it turns to steam, and starts evaporating. You may also decide to boil that same water in a pressure-cooker, raising the temperature of the water before it turns to steam, and additionally if you boil water in a vacuum, or in a lower than atmospheric pressure, water boils at a lower temperature.
And that’s refining for you!
So all the refinery does is boils crude oil, several ways. For example in an Atmospheric Crude Unit, using simple technology, at 375 degree Celsius, the refinery may produce propane gas, butane gas, naphtha, diesel, and AGO, Atmospheric Gas Oil; what’s left over is residual oil, which requires further equipment to refine or now that we know, we can just say boil.
The heavier residual oil can then be transported through pipes to the refinery’s Vacuum Unit for further processing to produce among other things, VGO, vacuum gas oil and VTB, vacuum tower bottoms, literally the left over bottom products, which can also be used, and they all derived from simply boiling the black sticky gook.
Second Question: OK, so PDVSA has a great desire to boil oil in Aruba. Why? What’s in it for PDVSA, why would they want to get involved with us?
Aha, said my friend: CITGO Aruba Refinery has two “Cokers,” which can be used in upgrading heavy Venezuelan crude oil.
What does that mean, I asked? He answered.
Cokers operate on the principle of thermal cracking which converts large hydrocarbon chains into shorter chains. You take the heavy sludge, you stick it in the coker, you heat it up and miraculously it emerges as a lighter more valuable crude oil.
Then you further enhance your product by matching these two Cokers up with other technology, to include a crude unit and a vacuum unit.
Your challenges are not over yet, in order to prepare the naphtha and diesel flowing out of the Coker for the crude and vaccum units, you first must hydrotreat them to desulfurize them.
ARE YOU STILL WITH ME?
I THINK IT IS INTERESTING.
Bottom line: The heavy Venezuelan crude oil, is now heavily discounted on the market, let’s say $10 per barrel, from $53 to $43. So let’s say Venezuela now sells its heavy crude oil at $45 per barrel. Then you can easily see if CITGO Aruba manages to upgrade 200,000 barrels per day x $10 per barrel – less operating cost, then its net profit could be as much as $1 million per day or say over $300 million per year, and could therefore justify spending $600-700 million to refurbish the Aruba refinery.
