Production of U.S. light crude oil and condensates is likely to continue dominating the domestic oil market, accounting for the majority of extra oil extracted over the next two years. But as U.S. refineries are expected to struggle to process it the need for relaxing the crude export ban will become more pressing, according to a new analysis by the U.S. Energy Information Administration (EIA).
In its "U.S. crude oil production forecast: analysis of crude types" report, released on May 29, the administration stated that total oil production in the country in 2014 and 2015 is predicted to rise by a further two million barrels per day. More than 60 percent of that projected increase will be in light crudes with a specific gravity of at least 40 degrees API, the EIA predicted.
But in order for U.S. refineries to be able to process such crudes major investments in upgrades and modifications are needed, Reuters reported, quoting energy experts. Various downstream units, heat exchangers, furnaces and distillation towers will have to be overhauled, which will take both time and money.
According to one of the biggest U.S. refiners, Valero, making the necessary modifications to refineries requires about two years to obtain a permit and a further two years for construction, so starting new processes can take four to five years. By comparison, building pipelines or rail links takes much less time.