The OURSE model: Simulating the World Refining Sector to 2030

Abstract

The development of a model of the World Refining for the POLES model aims to represent the oil product's supply at a world-wide level in a global energy model. The World oil refining industry faces to several challenges such as the increasing oil derivatives demand in the transport sector, the improvement of the specifications of these products, the crude oil availability and the limitation of carbon emissions. An aggregated refining model linked to the POLES energy model has been developed to study these questions. The OURSE (Oil is Used in Refineries to Supply Energy) model is a world-wide aggregated refining model which is designed to simulate the world oil product supply for the POLES (Prospective Outlook for the Long-term Energy System) model. OURSE is able to simulate the impact on the world refining industry of changes in the crude oil supply (in costs and qualities) as well as in the oil product demand (in terms of level, structure and specifications). OURSE also enables to assess the consequences of a carbon emission regulation (caps and taxes) as the adoption of various kinds of alternative fuel policies. More precisely, these impacts are evaluated as regards the world refining structure (investments), but also its balance (production and trade of petroleum products), its pollutant emissions (CO2 and SO2) and its costs (of production, investments, etc.). The OURSE model is based on a linear programming (LP) model, that is frequently used in the refining industry, both for refinery management and investment analysis, since a marginal cost pricing is relevant for the oil products. Designed to represent the world-wide refining industry into the POLES model, the OURSE model has to contain a restricted number of equations. This justifies that OURSE includes a representative upgrading refinery defined for nine aggregated refining regions in the world that are North and central America, Latin America, North and South Europe, CIS, Africa, Middle East, China, Other Asia and Oceania. Similarly, since directly linked to the number of crude oils considered, the model size is also reduced by considering, for each world refining area, an aggregated crude oil supply based on five representative crude oil qualities in the model. Lastly, a multi-plant approach is considered to make the OURSE model able to represent the oil product exchanges between the main regions in the world. Simulations for 2030 were performed. Thus, the paper presents the results of a prospective exercise for the oil refining industry which has been carried out with the worldwide refining model OURSE according to the oil product demand projections of European Commission for Europe with the PRIMES model (European Commission, 2010) and the IFP projections for the rest of the World. According to the European Commission's projections, the European oil product demand will slowdown by 14% between 2005 to 2030, reaching 566 Mtoe in 2030 (reference scenario). During the same period, the worldwide oil product demand will have increased by 23% up to 4411 Mtoe in 2030. The share of light, medium and heavy oil products will change with a decreasing share of heavy products and a more important consumption of medium distillates. Nevertheless, in the PRIMES European projections, the respective share of gasoline and diesel oil in the automotive fuel consumption are not strongly affected during the next two decades. However, the specification of the products will be more severe, especially for the marine bunkers (future IMO specifications as mentioned in the first part of the report which is dedicated to oil products). On the supply side, the crude oil supply has been estimated until 2030. This analysis is based on IFP geosciences expertises. In 2030, the API degree of the conventional crude oil will slowly decrease. However, this will be balanced by the increasing share of condensates in the refinery supply and the availability of upgraded crude oil from the extra-heavy oil. Finally, the API degree of the refineries supply should remain quite unchanged.