Hot Air About Refineries?

Over at Hot Air is a piece based in part on an AP story to the effect that the so-called Inflation Reduction Act, as horrendous as it is, might have a silver lining: It might toss a few bones to the fossil fuel industry.

Among those bones? A new refinery!

The oil and gas industry clearly saw this coming and they had been preparing. Despite the CEO of Chevron predicting earlier this year that no new oil refineries might ever be built in the United States again thanks to Joe Biden, we learned in recent weeks that Meridian Energy Group has received approval and is moving forward on construction of a new refinery in North Dakota. Two other previously shuttered refineries are undergoing refurbishment and will reopen later this year. [link in original]

Intrigued -- because I myself thought that there had been no new refineries built in the US since 1977 and have probably repeated that claim myself -- I took a look at the Forbes article cited as the source of what "we learned in recent weeks."

It's two years old.

Since, at the very least, this means there has been new construction on oil refineries since 1977, I looked that up. According to the U.S. Energy Information Administration, the last major refinery was built in 1977. Sixteen smaller ones have been built since.

So is the new refinery in North Dakota a major one or just another small one? Forbes fills us in:

"[O]ur concept is to build refineries that are very capital efficient because they are rifle-shot designs that target a local shale resource. And we'll process that local crude oil and serve that regional market. We'll get the crude at a better price, and also have lower operating and capital costs per barrel. And you save all the transportation of moving the crude down to the Gulf and then bringing it back again in the form of refined product."

And, much later:

Keeping the permitting process as simple as possible and at the state level was also the driving force behind the project permitted capacity. "We sized the North Dakota plant at 49,500 bopd because anything 50,000 barrels or above has to get an additional permit from the Public Service Commission similar to a power plant siting. So, we decided 5 years was long enough to be permitting, let's just knock that out.

We need more of these. (Image by W Clarke, via Wikimedia Commons, license.)

In other words, this is a small, local refinery much like all the others built since 1977, with a capacity less than a tenth of that of the large (and since expanded) refinery built in 1977, as you can tell from the table at the EIA site.

Small refineries have their place. And perhaps small ones make the most sense in shale country -- I have no idea. But it is also clear that federal regulations effectively prevent construction of large refineries via a time-consuming and onerous additional permitting layer.

I see no indication at all that Manchin has solved that problem or that Biden deserves the credit he seems to want for building the "first refinery" -- major or not -- since 1977.

As you can tell from the AP story, leftists are in full dudgeon about these Manchin-demanded "concessions" to the only energy industry capable of giving us what we need any time soon -- and some conservatives seem desperate for good news. Both would appear to be overreacting.

These measures may merit a sigh of mild relief, but they certainly don't look to me like we've even temporarily brought back the good ole days of building large refineries.

-- CAV