November 2017

Columns

Operations: Maximizing the opportunity of discounted crudes

As the oil and gas industry adjusts to a business environment in which crude oil prices will likely remain lower for longer, refiners continue looking for ways to maximize their profitability.

Duggan, G., Navarrete, R., Baker Hughes

As the oil and gas industry adjusts to a business environment in which crude oil prices will likely remain lower for longer, refiners continue looking for ways to maximize their profitability. Historically, refiners could boost their profits by adding larger volumes of lower-priced discounted (opportunity) crudes. However, due to low crude oil prices, the price differential between conventional crudes and opportunity crudes is shrinking. For example, a refiner accustomed to running a discounted crude at 10%–20% of its feed slate might have to run the same crude at 30%–40% of its slate to capture similar profits. Additionally, refiners may be forced to dig deeper into the discounted crude st

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