21 February 2013 22:48 [Source: ICIS news]
LONDON (ICIS)--The sustained US crude oil advantage wrought by the tight oil and shale gas boom is making a difference in the refining sector and is set to influence the base oil industry, Alan Gelder of energy research and consultancy Wood Mackenzie said while speaking at the 17th ICIS World Base Oils conference in London.
“The traditional mantras for refining are being turned on the head,” the speaker said.
This is happening because the cost differentials between light and heavy crudes are narrowing, Gelder explained.
While the crude oil slates have been largely heavier and sour, this is not happening with the American tight oil.
“US tight oil is light and sweet and better than Brent,” the speaker said.
“The US is becoming a regional crude oil exporter – a huge exporter – and this becomes enormously profitable.
Gelder said the global slate of light/sweet crude is better for gasoline production than for diesel, but Wood Mackenzie sees the global market aiming more toward a diesel perspective.
“Competition for the low, heavy crude will increase,” the speaker said.
Such changes are important to the base oil market, as producers seek and compete for crude oil slates that are the best fit for the various lubricant production technologies, with cost and margin potential ongoing barometers dictating crude oil choices.
The 17th World Base Oils conference is being held in London through 22 February.
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