US energy secretary calls for study on oil refineries

Jun 24, 2004 02:00 AM

US Energy Secretary Spencer Abraham asked the National Petroleum Council to study the country's oil refineries, looking particularly at how to increase production capacity.
"Such a study will give further understanding to the complexities of the ever-changing oil and gas markets, and will help us address this challenge head on," Abraham said, pointing out that no new refineries have been built in the United States since 1976.

The Energy Information Agency projects US gasoline demand to increase by 43 % and diesel by 48 % by 2025. The agency also expects the country will need 28 mm bpd of oil to meet its demand in 2025. The projected refining capacity is expected to only reach 21 mm bpd by that point.
"The American people need to know how we are going to address these challenges," Abraham said.

The energy industry clearly has one major target of blame for declining production and refining capacity: environmental regulation.
"The rules and regulations are so stringent that the cost of building here is many times more than what companies would spend to built a still environmentally friendly refinery offshore," said Bruce Bell, chairman of the Mid-Continent Oil and Gas Association of Oklahoma. "We have to take sensible approaches. We need to base our regulations on science, not on somebody's idea of what the world should be like."

Bell said strict regulations by the Environmental Protection Agency and other government agencies have driven companies to build refineries in the Caribbean, Venezuela and the Middle East rather than in the United States. The result, he said, is more expensive imports and increased dependence on other countries.
While the energy industry has said the solution to lowering the cost of gasoline is increasing production and refinery capacity, environmental organizations say a better answer is to decrease demand.

Secretary Abraham also called for the petroleum council to implement a new system that would provide natural-gas production information in 60 daysrather than the current 120.
He also asked the group to study how much crude oil the country must have in inventory to meet current demand.

Source: VNU eMedia
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