Petroleum refining converts crude oil into fuels such as gasoline, diesel, kerosene, and aviation and jet fuel. In addition, oil refineries produce a number of other products such as LPG, propylene, naphtha, solvents and spirits, petroleum and needle coke, asphalt binder or bitumen, petroleum wax, and a number of feedstocks for the petrochemical industry including aromatics and olefins. Petroleum refineries can be segmented simply by the extent of crude oil conversion that is achieved in their operations.
Simple refineries typically process crude oil into the key transportation fuels such as gasoline and diesel. Cracking refineries have moderate conversion units such as the fluidized catalytic cracker (FCC) to convert more of the crude oil barrel into fuels and other products. Coking refineries, finally, have extensive conversion capacity including typically delayed coking and hydrocracking and can convert the entire barrel of crude oil into useful refined products and petrochemical feedstocks. Over time, the largest petroleum refineries have relied on integration to increase their margins by adding petrochemical plants and capacity to their operations.
Fuel markets have significantly broadened in the past few decades due to regulatory pressures such as California’s Low-Carbon Fuel Standard and the Renewable Fuel Standard. A few examples of alternative fuels that are gaining traction include biofuels such as ethanol, biodiesel, and renewable diesel; compressed and liquefied natural gas; and methanol and di-methyl ether (DME). The alternative markets will only expand as the Energy Transition gains momentum driving new interest in sustainable and low-carbon fuels.
Refiners face a number of near- and long-term competitive pressures. In the near-term, transportation fuel demand recovery, compliance with various regional and global regulations, and development of new export markets are all key challenges. In the long-term, competition with electric vehicles, the necessity to cut Scope 1-3 emissions, and repurposing refining for the Energy Transition future are all critical disruptions that refiners will have to prepare for.
How ADI helps refiners and fuel companies
ADI Analytics brings deep expertise, rich experience, and numerous models, analytics, and databases on fuels and refining assets, costs, capacity and assets, demand, trade flows, and other analytics to help clients with a wide range of needs. Our teams have helped refining operators conduct insightful market research to support them with asset, geographic, and segment strategies. ADI has led numerous projects focused on costs and economics of new refineries, refining expansions, upcoming regulations, and other strategic developments.
Our team brings a strong understanding of the refining supply chain including crude oil procurement and hedging, catalysts, refinery chemicals, and other consumable strategic sourcing strategies, and broader capex and opex optimization. Finally, ADI has in-depth expertise in regulations and policies focused on fuel and refining, and new technologies, processes, and innovation that can help refiners compete better in increasingly difficult markets.
Relevant examples
A few examples of our work in the fuels and refining sector are presented here. Please contact us to learn more about how ADI can help you.
Asset strategy
- Assessed feasibility of new 350 kbpd refinery-petchem complex in Panama for Latin American government agency
- Developed sustainability strategy based on industry best practices for Asian refiner enabling client’s DJSI listing
- Supported a major refiner identify opportunities in fuel trading across several U.S. cities along two major petroleum product pipelines
Costs and economics
- Evaluated cost and economic feasibility of new hydrocracker to produce lube oil base stocks for U.S. Gulf Coast refiner
- Benchmarked cost performance of U.S. Gulf Coast refiner based on regional supply curve using marginal costs
- Conducted an assessment of the refining sector in Hawaii in support of an investment thesis for a private equity investor
Supply chain analysis
- Defined digital, data analytics, machine learning, and data science opportunities to cut opex in refining for an industrial service company
- Sized global market for low-speed recip compressors in refining applications for European private equity investor
- Assessed U.S. ethanol market in the near-and medium-term in support of its due diligence on an acquisition target for a private equity firm.
- ADI was engaged by a private equity firm to assess U.S. ethanol market in the near-and medium-term in support of its due diligence on an acquisition target.
Technology assessments
- Benchmarked sulfur removal process licensors to meet low-sulfur gasoline specs for Asian refiner
- Evaluated water use and treatment technologies in refining industry
- Helped a venture capital biofuel start- up with its business model and strategy
Regulatory strategy
- Prepared EPA fuel registration strategy for start-up commercializing process to convert waste plastic to synthetic oil
- Identified strategic and operational levers to comply with California’s low-carbon fuels standard for oil major
- Developed an in-depth outlook for the global diesel market for the refining group of an oil and gas major
Access our thinking
ADI is a thought leader in the fuels and refining sector. Access our latest thinking including blog posts, white papers, conference presentations, and videos on the ADI insights section.
