1. Some thoughts on missing barrels while watching the Super Bowl.
The only accurate way to look at what is being consumed in the oil market is mass. Not volume.
To try and balance volume takes way too many assumptions to be accurate
The only accurate way to look at what is being consumed in the oil market is mass. Not volume.
To try and balance volume takes way too many assumptions to be accurate
2. Why? Because mass cannot be created or destroyed therefore it will always balance.
Volume on the other hand is affected by pressure, temperature, composition, refinery configuration etc. and is effectively impossible to balance especially after processed in a refinery.
Volume on the other hand is affected by pressure, temperature, composition, refinery configuration etc. and is effectively impossible to balance especially after processed in a refinery.
3. To try and standardize a barrel of crude oil or products to minimize the effect of volume variance a standardized temperature and pressure is used.
But that leaves composition that prevents standardization.
But that leaves composition that prevents standardization.
4. Chain length and shape of the hydrocarbon chains plus impurities such as sulphur change the density, specific gravity or API.
Example
A barrel of 45 API oil weighs 127kg
A barrel of 20 API oil weighs 148kg
Example
A barrel of 45 API oil weighs 127kg
A barrel of 20 API oil weighs 148kg
5. So in a well configurated refinery a barrel of low API crude contains more volume of standard spec. product than a higher API crude
It means any inaccuracy of the average API of crude in calculation could underestimate amount of products produced and overestimate crude demand
It means any inaccuracy of the average API of crude in calculation could underestimate amount of products produced and overestimate crude demand
6. Further a refinery produces more volume of products than crude it processes due to breaking/separation of hydrocarbon chains. Volume increases can be more than 15%, I.e. 1 bbl crude produces 1.15 bbls products
underestimating processing gain means overestimating crude demand
underestimating processing gain means overestimating crude demand
7. Finally the breakdown of products produced also changes the volume of crude required. The more lighter products produced the more volume produced for the same level of crude produced.
8. There are many assumptions made with volume balances and a significant of average conversation factors that are used. Any inaccuracy in those will make a big difference.
9. In this case missing barrels is not just likely newly determined extra demand but also underestimating the amount of products produced per barrel or the refinery operation.
It is why doing volume instead of mass balances is just so inaccurate.
It is why doing volume instead of mass balances is just so inaccurate.
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