Petroleum Refining

SIC 2911

Companies in this industry

Industry report:

This category covers establishments engaged primarily in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, and lubricants through fractionation or straight distillation of crude oil, redistillation of unfinished petroleum derivatives, cracking, or other processes. Establishments primarily engaged in producing natural gasoline from natural gas are classified in mining industries. Those manufacturing lubricating oils and greases by blending and compounding purchased materials are classified in SIC 2992: Lubricating Oils and Greases. Establishments primarily engaged in manufacturing cyclic and acyclic organic chemicals are classified in various chemicals and allied product manufacturing industries.

Industry Snapshot

The U.S. refinery industry continued its path toward consolidation and cost efficiency in the face of price instability and tightening environmental regulations. There were fewer than 200 companies in this industry during the mid-2000s. Tensions in the Middle East, culminating with the U.S. war with Iraq, caused oil prices to spike as high as $40 per barrel in early 2003 before returning to the mid-$20s. By the end of 2004, prices had increased to between $35 and $50 per barrel, and by mid-2006 prices had shot up above $75 per barrel. After dropping as low as $50 per barrel, they rose again to nearly $100 per barrel by late 2007.

A traditionally volatile industry, refining experienced a significant change in composition during the early 2000s as "Big Oil" gradually gave over market share to independent refiners. Non-Big Oil companies had a major share of U.S. refinery capacity, which was estimated to be 16.5 million barrels per day (b/d) in 2004, while demand was 21 million b/d. In 2004, refineries operated at 93 percent, compared to a dismal 78 percent in 1985. In the mid-2000s, the industry was expanding to match the predicted increase in demand, which was expected to reach 28 million b/d by 2007.

In the late 2000s the U.S. refining industry was experiencing a significant reduction in profitability, with current margins contracting as a result of the global economic downturn. A decline in petroleum product demand and the continued penetration of ethanol into the gasoline market has the potential to further suppress refining margins. Unfortunately, the Energy Information Administration (EIA) reported the downward trend would continue into 2010, with demand dipping 3.7 percent.

Organization and Structure

The process of turning crude oil into refined products, the "downstream" side of the oil business, involves several key participants and cannot be fully understood without a rudimentary knowledge of the "upstream" side of the oil business, the process of obtaining crude oil. Upstream operations consist of exploration, geological evaluation, and the testing and drilling of potential oilfield sites, which are all of the procedures necessary to get oil out of the ground (see SIC 1311: Crude Petroleum and Natural Gas). Downstream operations include pipelining crude oil to refining sites, refining crude into various products, and pipelining or otherwise transporting products to wholesalers, distributors, or retailers.
Because many downstream companies are subsidiaries of conglomerates that maintain upstream subsidiaries, the sale of raw materials to refiners is often essentially a transfer of products between different operating units of the same corporation. Therefore, petroleum refiners often depend on the upstream arms of their parent corporations for supplies of crude and then, in turn, supply wholesalers (who sell to independent retailers) and retailers (i.e., company-owned gasoline stations) that are part of the same corporation. The major oil companies operating in this system are known as "integrated oil companies," and non-integrated companies are often referred to as "independents."

This tendency for massive, integrated supply systems affects the oil industry and refiners in that any shift in condition at any point in the crude-to-product chain is felt equally at all levels. The economic trickle-down that exists in other industries offers no stabilization in petroleum refining.

Processes and Terms.
Petroleum refineries turn crude oil into a variety of intermediate forms that are used in a wide range of products, from asphalt to plastics. All products begin in much the same way: with the distillation, or vaporization, of crude. Distillation begins when crude oil boils. Components within crude condense at different rates and are extracted at progressive points along a time/temperature continuum. Lighter, high-value products, such as propane, butane, gasoline, and jet fuel, condense at lower temperatures while heavier compounds require high temperatures or a special extraction method to be transformed into such products as diesel fuels, heavy fuel oil, and asphalts. The components of distillated crude vary according to the makeup of the raw crude, with some batches containing large amounts of sulfur, for example, while others may be bituminous and full of heavier compounds.

Before distillation, crude is stored in groups or "farms" of steel tanks. Distillation occurs in a fractionating tower, where the various fractions, or portions, of the crude are separated. The "straight runs" obtained in the fractionating tower are treated in secondary stages to create final products.

Some secondary processing involves simple heat and pressure manipulations, while other processes include complex chemical reactions. Thus, not all refineries are capable of all processing techniques. Some of the most common processes include coking, which creates gasoline and gas oils from the heaviest molecules of the crude. Catalytic cracking uses heat, pressure, and a chemical catalyst to double the gasoline yield in a barrel of crude by converting heavy cuts to lighter products. Hydrocracking uses hydrogen to make 100 percent gasoline from the light gas oils that catalytic cracking and coking produce. Hydrofining removes sulfur from the crude, making a cleaner-burning base fuel and allowing the sulfur to be sold as a by-product. Reforming rearranges molecules in a low-octane gasoline to produce a higher octane. Alkylation enlarges propane and butane molecules, allowing them to be mixed with gasoline.

Products emerge from these processes that can be sorted into three main headings. Gas and gasoline, or "white" products, come from the lighter end of the barrel, which is usually about 20 percent of the total yield, and are used for automobile gas, aviation fuel, and feedstocks for petrochemicals. Middle distillates, from the middle quarter of the barrel, yield kerosene and light gas-oil, heating oil, diesel oils, and waxes. Fuel oil and residuals are the heaviest, coming from the bottom 55 percent, and make heavy fuel oils (for use in power stations and ship furnaces), asphalt, and bitumen.

Petroleum products have a wide variety of uses. Solvents, for example, go into ink, oil-base paints, dry cleaning solutions, rubber cement, and metal cleaners. Sodium hydrosulfide improves paper pulp and tans leather, while organic chemicals serve an entirely separate spectrum of uses as petrochemicals.

Ethylene, the largest-volume organic produced in the United States, goes mostly into fabricated plastics but is also used in antifreeze, synthetic fibers and rubbers, and detergents. Propylene has several chemical offshoots that are used mainly in film, packaging, and fibers. Butadiene goes primarily into synthetic rubber, but it also is used in ABS resins, latexes, and nylon fibers.

Aromatics, including benzene, toluene, and the xylenes, are primarily useful as blending agents in gasoline, as well as in increasing the octane rating of unleaded gas. Methanol is traditionally used in formaldehyde, acetic acid, solvents, and polymers for adhesives, fibers, and plastics. In years to come, methanol is likely to be in greater demand to make the oxygenate MTBE (methyl tertiary butyl ether). MTBE, used since 1979 when lead additives began to be phased out, is a component of reformulated gasolines in cities designated by the Clean Air Act of 1990. Its use grew rapidly during the 1990s in an effort to comply with air-quality standards, but by the late 1990s, it was found to contaminate groundwater and was being phased out in states like California.

Product yields per barrel have shifted with demand. In 1981, 10.4 percent of a barrel was used for residual fuel oils, but only 6.7 percent was used in these fuel oils in 1991. Moreover, while 7.6 percent of a 1981 barrel went for jet fuel, 10.3 percent of a 1991 barrel was used in jet fuel. This trend continued as various emissions regulations were adopted. Federal requirements for low sulfur diesel fuel and reformulated gasoline changed the yield of a barrel of crude, but at the same time, wastewater and toxic solids limitations would change the methods of obtaining yields.

Financial Structure.
Once crude oil has been refined, its products may be sold as raw materials to other manufacturers, such as plastics or pharmaceutical companies. Other products may be in a final, packaged form and destined for retail sale in service stations or chemical companies.

Within an integrated oil company, a refinery's profits are part of the total profits earned on the front end. The ability to compete depends entirely on efficient production without excessive expenditures so retail prices can remain low. Like the supply-side interdependency of integrated oil companies, integrated profit margins are cumulative. They must absorb the costs of every aspect of the oil business, including geological research, refining procedures, and trucking the finished product, to show real net gain.

For independent refiners, turning a profit traditionally rested in purchasing crude at rates low enough to allow final product levels to match those of the integrated oils. Free from the overhead of exploration and test drilling, independents were able to compete effectively for years simply by taking advantage of plentiful, cheap supplies of crude. However, the increasingly stringent environmental requirements of the 1980s and 1990s put independents at a distinct disadvantage. Even with low crude prices, facility upgrading cut deeply into revenues, resulting in falling profit margins.

Competitive Structure.
The U.S. industry is made up of integrated international oil companies, integrated domestic oil companies, and independent domestic refining/marketing companies. Like the oil business in general, refining is dominated by integrated internationals, specifically a few large companies such as BP Amoco, ExxonMobil Corporation, and Chevron Corporation.

Of the nonintegrated refining companies, which are made up of independents that focus exclusively on refined goods production and marketing, Marathon Ashland and Tosco stood out as major players. However, no independent companies competed on the same level as any integrated international in terms of net profits or refined goods sold.

Capacity also distinguishes leading refiners as arms of integrated oils. ExxonMobil, BP Amoco, and Chevron have a capacity of more than 1 million barrels a day, with Marathon Ashland and Tosco trailing them closely. In 1999, the top 10 refiners controlled an estimated 58 percent of U.S. capacity. This proportion was expected to rise when announced mergers and joint ventures were factored in. At that time, around 30 U.S. companies had capacities of 100,000 barrels or more per calendar day (b/cd).

As the costs of upgrading refineries escalates, the difficulties of small refining operations will probably intensify. Existing refineries can remain viable only with mass infusions of capital, and only large integrated oils have cash flow to divert. Even the majors struggled. Shell, once the largest U.S. refiner in terms of capacity, has allied nearly all of its U.S. refineries in joint ventures with Texaco and others. Upgrading and compliance costs are expected to continue to shift the competitive structure of the U.S. refined petroleum products market toward an oligopoly by integrated internationals.

Background and Development

The use of semi-refined fossil fuels dates back several millennia. In Mesopotamia, 6,000-year-old inscriptions include descriptions of oil and asphalt used as waterproofing materials. Egyptians embalmed their dead in asphalt, and the Romans wrote by the light of oil lamps and drove chariots with wheels lubricated by crudely refined greases.

Early Development.
The invention of the kerosene lamp by Dr. Abraham Gesner of Pittsburgh prompted the formation of the Pennsylvania Rock Oil Company in 1854. During this time, Americans sought alternative lamp fuels in response to a shortage of whale oil. Dr. Gesner extracted his "improved illuminating oil" from coal, but his methodology proved invaluable to petroleum refining's founding father, Benjamin Silliman, Jr., who wrote a treatise on the chemistry of petroleum in 1855 and then promptly figured out how to distill it. Steam was introduced into the distillation process in 1858. In 1860, the first semi-continuous refining system, operating in a battery of stills, was patented by D. S. Stombs and Julius Brace of Virginia. Luther Atwood cracked petroleum later that year, and Jean Lenoir then produced a three horsepower motor, which ran on benzene. The first full-fledged refinery began production in 1861 near Titusville, Pennsylvania, adjacent to the site where Edwin Drake and W. A. Smith had discovered the first producing oil field in the country at Oil Creek. The refinery churned out little except kerosene since demand for lubricating oils and greases was not high enough to keep anyone in business, and petroleum as a transport fuel was still several decades away.

Julius Hock's invention of the noncompression petroleum engine in Vienna in 1869 perhaps marked the beginning of the modern refining process, as engine fuel became the primary use for petroleum markets worldwide. "Horseless carriages," which were powered by burning hay, steam, or electricity until Frank and Charles Duryea built the first gasoline-powered automobile in 1892, eventually became the channel through which refined petroleum captured public attention. The internal combustion engine suddenly brought petroleum to a pinnacle of economic significance.

Industrial Age.
In the early part of the twentieth century, the use of petroleum-driven locomotion increased with technological developments. Automobiles, airplanes, and military vehicles proliferated as petroleum exploration and refining outpaced itself annually. Production facilities were built in response to the intense demand for petroleum products during World War I. After the war, these facilities created solutions to agricultural, industrial, and transportation problems as the increasing capabilities of a barrel of crude were understood. Even food supply was drastically affected, as gasoline-powered tractors allowed farmers to increase their productivity, and diesel-powered trucks could speed goods to market on asphalt surfaced highways.

World War II prompted another surge in refining capacity, yielding subsequent massive peacetime productivity. U.S. consumers demanded large, stylish automobiles, warm houses, and air travel during the 1950s. For nearly three decades, Americans found uses for more refined petroleum. The "more is more" credo became refining's byline. A constant, steadily increasing demand for new products was met by the constant, steadily increasing supply of new crude oil supplies. Unfettered by environmental controls or financial limits, refiners expanded and enjoyed a long golden age of prosperity.

Oil Crisis.
Then, in 1973, a political crisis in the Middle East spurred a severe recession and highlighted the extent to which the United States had become dependent on foreign oil supplies. The overthrow of the Shah of Iran in 1979 precipitated a series of supply interruptions and price increases that aggravated the crisis. Overcompensating for the shortages caused by Iran's domestic turbulence, refiners misjudged the oil demand for the early 1980s. While worldwide refining capacity increased tenfold between 1938 and 1981, "more is more" no longer held true, and in the 1980s, refiners faced a loose market with substantial excesses in place.

Trends in the 1990s.
Refiners entered the 1990s burdened by unpredictable supply and demand factors and the potential business consequences of the burgeoning environmental movement. Issues such as recycling, air quality, global warming, and water pollution were high on the U.S. legislative agenda. Consequently, the business strategy of refiners shifted toward finding cleaner-burning, more efficient fuels for smaller cars, as well as finding ways in which those fuels could be created that were more environmentally friendly.

A mild recovery in demand for refined goods could not alleviate the strain refiners experienced in the early 1990s due to unimproved profit margins. Reduced operations, refinery closures, and low sales characterized a gloomy market. The 1991 recession took its toll, and the industry braced itself in anticipation of new federal manufacturing standards. These standards, prompted by a growing concern for the environment, meant that depressed market conditions were compounded by rigorous, expensive mandatory upgrading.

Petroleum refining, like the rest of the oil industry, experienced dwindling profits, reaching a five-year low in 1992. However, spending on refining simultaneously rose 8.3 percent in an effort to meet costs of upgrading and research into alternative processing. Moreover, the recession prompted shutdowns totaling 114,850 b/cd capacity and dampened domestic refined product consumption.

Profit margins remained subdued for most of the decade but improved overall in the late 1990s. Among large refiners tracked by the U.S. Energy Information Administration, refined product margins rose from a meager $0.77 a barrel in 1994 to a modest $1.58 a barrel in 1998. During that period, marketing costs were cut substantially, while energy and other operating costs fluctuated.

Environmental Regulation.
Environmental legislation and regulations have had a significant impact on the industry. The Clean Air Act of 1990 required that the 39 smoggiest cities in the United States substitute oxygenated gasoline for winter use beginning in November 1992. By 1995, the country's nine smoggiest cities--Baltimore, Chicago, Hartford, Houston, Los Angeles, Milwaukee, New York, Philadelphia, and San Diego--had to implement Phase I specifications of the Act. Phase I stipulated that oxygenates (MTBE) be substituted for aromatics, which do not burn completely, in octane enhancers, essentially prescribing a complete reformulation of automotive gasoline.

The new gasoline was required to have a minimum oxygen content of 2 percent by weight, a maximum of 1 percent benzene by volume, a maximum aromatics content of 25 percent, and no heavy metals. It could not cause an increase in nitrogen oxide emissions and had to create lower tailpipe emissions of volatile organic compounds and toxic air pollutants (relative to a baseline of 1990 summertime gasoline). The implementation of substitutions and reformulations prescribed in Phase I was estimated to cost refiners between $3 and $5 billion.

Furthermore, the California Air Resources Board (CARB) instituted standards exceeding those of the Clean Air Act, requiring them to be met by 1996. Some analysts predicted the CARB standards would eventually replace Clean Air standards nationwide.

Estimates for compliance costs for U.S. refiners fell within the $20 billion range, as four major amendments of the Clean Air Act come into play. In October 1993, ultra-low-sulfur diesel fuel (0.05 percent by weight) was required nationally. January 1995 marked the deadline for nationwide Stage I gasoline reformulation, and Stage II was to be met by January 1997, requiring adherence to a "complex" model as opposed to Stage I's "simple" model. By January 2000, the amendments required an additional 10 percent reduction in organic compounds and air toxins from the 1990 baseline fuel, with no increase in nitrogen oxides.

In 1999, the 159 operating U.S. petroleum refineries produced an average of 8 million barrels of gasoline per calendar day, 1.6 million b/cd of jet fuel, 3.4 million b/cd of distillate fuel oil, and 700,000 b/cd of residual fuel oil, according to the Energy Information Administration. Gasoline typically supplied about half of the industry's revenue. Excluding closing stocks, total U.S. demand for refined petroleum products was estimated at 19.44 million b/cd that year, which was 9.7 percent above 1995 levels and 14 percent above 1990 levels. Demand was expected to reach nearly 20 million b/cd by 2001, a 2.6 percent volume increase over 1999.

Price Volatility.
Oil prices remain problematic for refiners. The price volatility that began in the late 1990s was created primarily by policies of the Organization of the Petroleum Exporting Countries (OPEC) and by softness in world oil markets. Prices tumbled in 1998 when OPEC producers failed to curb their crude oil output despite recession in Russia and parts of Asia and South America. With heavy supply and light demand, prices sank to levels not seen in decades. According to one analyst, the 1998-1999 low reached Depression-era levels when adjusted for inflation.

However, in early 1999, OPEC ministers agreed to limit production in order to cut crude oil supply and revive prices. Within months, prices more than doubled, surpassing the Gulf War peak of 1990. They remained high into 2000. This, in turn, provoked diplomatic efforts to get OPEC to raise output and stabilize prices. At that time, U.S. crude imports were expected to average more than $21 a barrel through at least 2001.

Oil companies, including refiners, can be hurt by both low and high prices. In general, low prices benefit downstream business (refining and marketing), whereas high prices benefit upstream operations (exploration and production). Thus, low prices tend to hurt integrated companies the most, as their exploration and production operations yield less revenue, and usually profit, on the oil they extract. Meanwhile, high prices tend to squeeze refiners because they must pay more for crude, and especially amid price volatility, they have trouble passing higher costs on to customers. The process is complex, though, since inventories and other factors can alter individual companies' results.

New Environmental Measures.
New environmental laws and regulations continued to challenge the industry. January 2000 marked the introduction of the EPA's Phase 2 regulations for reformulated gasoline (RFG) under the Clean Air Act Amendments of 1990. The second phase continued the EPA's requirement that gasoline contain at minimum 2.1 percent oxygen by weight and no more than 0.95 percent benzene by volume. It further mandated that gasoline provide greater reductions in vehicle emissions of toxic air pollutants, volatile organic compounds, and nitrogen oxides.

Refiners achieved these specifications by formulating their products in different ways, and the changeover involves considerable cost. In 2000, the U.S. market for Phase 2 reformulated gasoline (RFG) was estimated at 34 percent of total gasoline demand, although the penetration rate varied widely by region. Because not all areas are legally required to use RFG, getting the proper formulation to the correct market can also create logistics costs and challenges for oil marketers.

Meanwhile, even as refiners ramped up operations to produce RFG in compliance with regulations, an unintended side effect of boosting oxygen in gasoline was the creation of separate environmental worries. Research found that the leading oxygenate MTBE was contaminating groundwater. The pollution was apparently non-lethal but nonetheless troublesome. In 1999, California's governor reacted by banning MTBE, with an effective date of 2002. Other states and the federal government considered restricting it as well. Abraded by the turnaround on MTBE, which was expected to mean another round of expensive refinery upgrades, industry officials pressed for more time and research before MTBE was banned outright.

Refining is a volatile business, with wide and frequent swings in profit margins. Global Markets explained that "Refining is above all cyclical. Cash flow varies with runs and, more dramatically, with margins. When product stocks are low and throughputs near capacity, margins soar amid bottlenecks and price spikes. Nevertheless, a small capacity surplus is enough for margins to collapse, leaving only efficient refiners earning a profit." Poor margins have prompted large companies to reduce refinery numbers. In fact, Big Oil's market share fell from 52 percent in 1990 to 36 percent in 2003.

As evidence of the industry's cyclical nature, after the extremely poor margins of the early 2000s, refining margins were once again strong and ran well above breakeven by the first quarter of 2003. In March 2003, price margins averaged $5.57 per barrel, $1.00 above the fourth quarter in 2002 and $2.00 higher than the first quarter of 2002. By May 2004, profit margins were a staggering $12.61 per barrel, and in May 2006, as oil prices topped $79 per barrel, they peaked at $39 per barrel for U.S. West Coast refineries, then averaged $23 near the end of the year.

Increasing environmental regulations made refineries a highly capital-intensive industry. As a result, no new refineries had been built in the United States since the 1970s, and only one facility in Arizona was slated to begin construction in 2005. Several plants were in serious danger of closing rather than face new environmental standards for clean fuel. Standard compliance carries significant costs for refineries, with no return on the investment.

As part of its implementation of the Clean Air Act, the EPA also issued one of the most controversial new regulations about sulfur content in gasoline. Under so-called Tier 2 requirements, the EPA followed another California initiative that reduced sulfur in gasoline almost 90 percent. The regulation, which took effect in 2004, was projected to cost U.S. refineries $20 billion by the time it was completed in 2006. Industry representatives advocated a more gradual, targeted switch to low-sulfur blends, citing the costs and "unproven technology" involved in the conversion.

Current Conditions

Utilization rates of U.S. refineries reached 90.8 percent in July 2007, with related refining products totaling 15.6 million barrels a day, breaking the previous record by 22,000 barrels per day. Still, Congress' "ethanol craze" was further dampening the already staggering low profit margins for the refining business, especially since Congress wants to substitute it with ethanol in the long run, thus deterring refiners from adding additional refining capacity.

During 2008, U.S. refineries experienced what would be one of the worst global economic downturns the industry had seen as demand for oil and its related products plummeted. The price for a barrel of oil fell more than 70 percent during 2008 from a high of $147 in January. Consequently, refiners were beginning to feel the effects of the weakened economy as demand for gasoline, diesel, and related products dwindled. Refiners fared better when it came to distillate production with record output of 4.3 million barrels per day, up four percent over 2007, as did ultra-low sulfur demand advancing 10 percent to 3.1 million barrels per day.

Even the oil majors were not exempt from the volatile economic conditions, facing huge losses. ExxonMobil, the nation's largest refinery, posted a loss of $203 million in its refining sector in the third-quarter 2009, as did Chevron, which reported a $34 million loss during the same period, compared to a $1 billion gain in 2008. Independent refiners, such as Valero Energy, were hit the hardest, with the company reporting a $489 million loss during the third-quarter of 2009, following a $1.2 billion profit during 2008. Refiners were forced to cut production, idle operations, and close others. There were five refineries closed in 2008 alone. Although ethanol refiners were also depressed by the downturn, Valero Energy invested in a few, setting the stage for when the economy improves and ethanol demand rises due to further mandates.

"Refiners are increasingly convinced that even after the economy recovers, demand will not grow much in the coming years because of the rise of alternative fuel supplies and the advent on tougher efficiency standards for automobiles," Jad Mouawad noted in the New York Times in December 2009, adding that "The recent closings signal the end of a period from roughly 2004 to 2008, when demand soared, refineries operated near capacity and profits swelled."

Industry Leaders

BP p.l.c.
BP, the top integrated oil company worldwide, was formed in 1998 when British Petroleum and U.S.-based Amoco merged. The company's 18 refineries boasted a 3.9 million barrel capacity per day, the largest capacity in the United States. BP Amoco reported revenues of $266 billion in 2006. BP Amoco's revenues reached $367 billion in 2008, compared to $291 billion in 2007. The company employed an estimated 92,000 workers.

ExxonMobil Corp.
ExxonMobil Corp., the number-two integrated oil company, had 45 refineries in 25 countries, with a combined capacity of 6.4 million barrels per day. Revenue from all operations in 2006 totaled $377 billion, but only a fraction of that came from U.S. refining. The company was formed by a merger between two of the world's largest integrated oil companies, Exxon and Mobil. The company posted $477 billion in 2008 revenue with a reported 79,900 employees.

Exxon was created in 1934 by the merger of Standard Oil Company of New Jersey and Anglo-American Oil Company Ltd., taking the name Exxon in 1972. Exxon spent much of the 1990s reeling from bad publicity and large payouts following a massive 1989 Alaskan oil spill by its Valdez tanker. Mobil evolved from two mergers of Standard Oil, Standard Oil of New York, and Vacuum Oil, adopting the Mobil name in 1976.

ChevronTexaco Corp.
California-based ChevronTexaco was the second-largest U.S. refiner in 2006, with a daily capacity of 2.67 million barrels per day. The company reported $273 billion in 2008 revenue with 65,000 employees.

Valero Energy Corp.
With a daily capacity of 3.1 million barrels, Valero was the number one independent refiner in the United States in the mid-2000s. Its 15 refineries were in Texas, California, Oklahoma, Colorado, and other locations in North America and Aruba. The company posted revenues of $119 billion in 2008 with 21,765 employees.

Based on barrels per calendar day during 2009, ExxonMobil Refining & Supply Co. in Texas led in production with 572,500 million barrels at its Baytown site and another 503,000 million barrels at its Baton Rouge site in Louisiana. BP Products North America Inc. followed with production totaling 455,790 million barrels at its Texas City, Texas, site. Citgo Petroleum Corp. ranked third with 429,500 million barrels at its Lake Charles, Louisiana, site, while BP Products North America captured the fourth position with production of 405,000 million barrels at its Whiting, Indiana, facility. ExxonMobile Refining & Supply Co. rounded out the top five with another 344,500 million barrels produced at its Beaumont, Texas, site.


Employment in the refinery business has declined with technological advances, corporate consolidation, and the movement of operations overseas. In 1999, refiners had 92,000 employees in U.S. operations, a decline of 12 percent since 1995 and 22 percent since 1990. By 2002, refinery employment levels had fallen to 61,874, according to the U.S. Census Bureau, but by 2005, they had risen marginally to 62,531. Of these, 62,531 employees were production workers earning an average hourly wage of $37.19, considerably higher than the $30.72 average in 2002.

Within refineries, operators and crafts workers monitor products via computers. They analyze data and adjust machinery to ensure optimum yields, repair faulty equipment, and make statistical reports on output. Mechanical engineers work closely with operators, developing new machinery and making improvements whenever possible. These highly skilled technicians and scientists are the core of all refineries' staffs.

America and the World

Refining, as with the broader oil industry, is highly internationalized in many respects. Most large oil companies have considerable holdings in multiple regions of the world, and some, like ExxonMobil and BP Amoco, derive greater revenues from international operations than they do in their home markets.

Because of its strategic importance and other factors, the oil business in some nations is closely tied to government agencies. In some places, petroleum upstream and downstream activities are performed by government-owned corporations or regulated monopolies. As international trade liberalization and related political and economic forces became more influential, a trend toward privatizing government monopolies affected the oil business in a number of countries. Many major national systems being privatized in the early 1990s were inspired by Mexico, whose president from 1988 to 1994, Carlos Salinas de Gortari, used privatization as one method to turn around his country's flagging economy. Although it suffered a serious economic setback for other reasons, Mexico has been viewed by some as a lesson in the ills of planned economies and the virtues of market controls.

In 1993, the Italian state petroleum holding company Ente Nazionale Idrocarburi (ENI) began to unfold one of the largest privatization programs. Most key oil producing nations in Latin America, growing economies in the Asia-Pacific region, and much of western Europe were in various stages of privatization in the early 1990s, depending on free markets to sustain their national economies.

Members of the European Union (EU) faced challenges in their individual privatization efforts as well as in their collective energy legislative programs. For example, when EU efforts to reduce excess capacities required that England streamline some operations, the English public protested, claiming that mass unemployment in already depressed areas would follow. Government systems were thereby forced to continue supporting unprofitable operations.

The situation in England highlighted the reason that nationalized petroleum may become an industry of the past. Because of the decidedly global nature of petroleum markets, national systems might not be able to compete once a majority of producers/refiners become private industries. As more organizations adopt efficient, profit-motivated structures, the standards for products worldwide may begin to resemble those in the United States in terms of stringent environmental standards. If so, the U.S. market may become accessible to foreign competition.

There already has been a long history of joint venture and investment in the United States by refiners based overseas, and some of the integrated internationals that dominate in the United States are based in foreign countries, such as the Royal Dutch/Shell Group and British Petroleum.

The state energy companies of several OPEC countries, particularly Kuwait, Saudi Arabia, and Venezuela, invested heavily in U.S. downstream capacities in the early 1990s. Petreolos de Venezuela S.A. (PDVSA, the state petroleum company of Venezuela) acquired the remaining 50 percent interest in Citgo Petroleum in 1991, becoming the full owner of this subsidiary. Star Enterprise, a 50/50 petroleum refining and marketing joint venture between Saudi Arabia's Aramco and Texaco, began operating in 1989. Delta International, another state-owned Saudi company, began negotiating a joint venture with Fina Oil and Chemical, the U.S. subsidiary of Petrofina, a Belgian firm, for its U.S. refining and marketing operations. Furthermore, Mexico's state-owned PEMEX Corporation acquired a 50 percent interest in Shell Oil's Deer Park, Texas, refinery and began negotiations with other Gulf Coast refiners.

By the mid-2000s, global demand increased more than it had in the previous two decades. Most of this growth was due to huge gains in China, which accounted for 40 percent of growth. The increasingly complex subsidiary network of integrated internationals was projected to link many refineries in the United States in the next decade. As the global economy shrinks and ties between nations become stronger, the already cosmopolitan arena of petroleum refining is expected to have increasingly fewer political borders. Consequently, U.S. refiners may compete more directly with foreign firms for markets at home and abroad.

Research and Technology

Although advances in reformulating gasoline, substituting cleaner fuel bases, and eliminating production waste represent significant innovations in the industry, perhaps the most important revolution in petroleum refining technology involved the implementation of computers. In the early 1990s, distilling and manufacturing industries relied on mainframes that could record, compile, and recall data on all elements, from viscosity to sulfur levels, in any given barrel of crude. Everything from measuring proportions of ingredients to monitoring chemical reactions could be performed with computers, and engineers relied as much on 3-D graphic and diagramming software as on actual valves and gauges to determine improvements in processes.

With upstream technology breakthroughs such as 3-D seismography, horizontal and directional drilling, and enhanced oil recovery (EOR) helping to ensure that every drop of oil was pumped from the ground, the impetus to utilize oil at maximum efficiency was never stronger. Computers allowed such efficiency not only by storing and retrieving data in a central, accessible medium, but also by cutting the time required for compilation and computation. Moreover, by implementing self-cleaning machines monitored by more sophisticated computers, petroleum refiners were expected to be able to produce the low-toxicity fuels in demand and eventually find new areas for growth.

Nevertheless, patience, thrift, and ingenuity were paramount to survival in the refining industry. Demand for petroleum products was predicted to grow at only half the rate of the U.S. economy. New regulations were expected to limit the use of products that once had diverse applications, restricting them by season, geographical area, applications, and production costs. Federal standards requirements were likely to continue to proliferate, absorbing time and capital and human resources for research and experimentation.

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One of the Leading Constituent Laboratories under Council of Scientific & Industrial Research (Csir) Engaged in R&d Work in Petroleum Refining, Natural Gas and Petro-Chemicals and Contributing towards Creation of State of the Art Technology & Products. Cs
Mena Report; December 15, 2017; 357 words
...leading constituent laboratories under Council of Scientific & Industrial Research (CSIR) engaged in R&D work in petroleum refining, natural gas and petro-chemicals and contributing towards creation of state of the art technology & products...
Wipo Publishes Patent of Dow Global Technologies for "Process for Controlling Corrosion in Petroleum Refining Units" (American, Italian Inventors)
US Fed News Service, Including US State News; November 6, 2017; 351 words
...FOR CONTROLLING CORROSION IN PETROLEUM REFINING UNITS."Applicants: DOW...controlling corrosion and fouling in petroleum refining units. The corrosion controlling...the overhead system of the petroleum refining unit, either separately or...
Training on Aspen Hysys Petroleum Refining & Customised Reactor
Mena Report; November 6, 2017; 307 words
Limited Tenders are invited for Training On Aspen Hysys Petroleum Refining & Customised Reactor Tender Type: Limited Document Download / Sale Start Date: 06-Nov-2017 12:00 PM Document Download...
Wipo Publishes Patent of Dow Global Technologies for "Method and Composition for Neutralizing Acidic Components in Petroleum Refining Units" (American, Italian Inventors)
US Fed News Service, Including US State News; April 9, 2017; 340 words
...COMPOSITION FOR NEUTRALIZING ACIDIC COMPONENTS IN PETROLEUM REFINING UNITS."Applicants: DOW GLOBAL TECHNOLOGIES LLC...A method of inhibiting corrosion and fouling in petroleum refining units which comprises adding choline hydroxide either...
U.S. Petroleum Refining Outlook
Chemical Engineering; March 22, 2017; 554 words
...Manufacturers (AFPM; Washington, D.C.;, called 2016 a good - but not great - year for the petroleum refining industry, with exports of refined products robust at 3.3 million barrels per day (bbl/d) and demand projections...
Research and Markets Offers Report: Catalyst Regeneration Market for Petroleum Refining, Chemical Synthesis, Polymer and Environmental Applications
Manufacturing Close-Up; September 30, 2016; 555 words
...Research and Markets has announced the addition of the "Catalyst Regeneration (On-site and Off-site) Market for Petroleum Refining, Chemical Synthesis, Polymer and Environmental Applications: Global Industry Perspective, Comprehensive Analysis...
U.S. Petroleum Refining: Snapshot 2015: Developments from the 2015 AFPM Annual Meeting Frame a Picture of the Current State of the U.S, Petroleum Refining Industry
Chemical Engineering; May 1, 2015; 700+ words
...On a broad level, the outlook for the U.S. petroleum-refining industry remains bright, despite a recent decline...provides a forum for assessing the state of the petroleum-refining industry in the U.S. and for discussing some...
Finland : Metso Wins a Significant Contract to Supply Valve Solutions to Saudi Aramco S Petroleum Refining and Petrochemical Production Complex
Mena Report; February 28, 2014; 659 words
...a large order to be delivered to Saudi Aramco s petroleum refining and petrochemical production complex currently under...costs. The valve solutions will be delivered to the petroleum refining and petrochemical production complex of Saudi Aramco...

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