Cost Of Crude Oil Research Articles

Blending under uncertainty: Real options analysis of ethanol plants and biofuels mandates

The value of a representative ethanol producer, that benefits from both low and high gasoline prices in the short-run, is modeled. Ethanol producers make a modest competitive profit in the mandate-induced region of production. A low price of gasoline increases the demand for blend ethanol and consequently increases the profit of ethanol producers. On the other hand, when gasoline becomes costlier than ethanol, the capacity constraints of the biofuels sector bind and ethanol producers gain large quasi-monopoly margins. This is an interesting example of a market where two commodities are complement up to a point and then substitute after that. We postulate the value of an ethanol producer as a strangle option consisting of two real options: the option to substitute gasoline at times of expensive crude oil and the option to expand supply of blend at times of cheap gasoline. Using a dynamic model we show that the higher volatilities of crude oil and ethanol costs increase biofuels firms' value. We also find non-monotonic relationships between the value of an ethanol plant and several underlying variables, including gasoline price level. We estimate the value provided by a 10% blend mandate to be around $150,000,000 for a representative ethanol unit. Our results offer a novel view of oil and feedstock price risks in contrast to the common belief that considers those risks as a negative factor for the biofuels sector.

Low-carbon “drop-in replacement” transportation fuels from non-food biomass and natural gas

We assessed the technical and economic viability of small-scale plants producing “drop-in replacement” transportation fuels from non-food biomass and capturing and storing byproduct CO2 in spent shale-gas wells. Additional designs considered co-processing of natural gas — the least carbon-intensive fossil fuel — to increase liquid-fuel yields and plant efficiency, with some penalty in greenhouse gas (GHG) emissions footprint. For fuels from first-of-a-kind facilities to be cost-competitive with petroleum-derived fuels when crude oil costs $100/bbl, an effective GHG emissions price in excess of $250/tCO2,eq would be required. If lower production costs are achieved in successive facilities via innovation and experience, fuels from future plants may become cost-competitive at crude oil prices as low as $85/bbl in the absence of any GHG emissions price, and at $50/bbl with a GHG emissions price of $135/tCO2,eq, which the Intergovernmental Panel on Climate Change suggests is an emissions price level needed before 2050 to induce the emissions reductions needed to limit global warming to 2°C.

Blending Under Uncertainty: Option Value of Biofuels Mandates

The value of a representative ethanol producer that benefits from both low and high gasoline prices is modeled. Ethanol producers make a modest competitive profit in the mandate-induced region of production. A low price of gasoline increases the demand for blend ethanol and consequently increases the profit of ethanol producers. On the other hand, when gasoline becomes costlier than ethanol, the capacity constraints of the biofuels sector bind and ethanol producers gain large quasi-monopoly margins. This is an interesting example of a market where two commodities are complement up to a point and then substitute after that. We postulate the value of an ethanol producer as a strangle option consisting of two real options: the option to substitute gasoline at times of expensive crude oil and the option to expand supply of blend at times of cheap gasoline. Using a dynamic model we show that the higher volatilities of crude oil and ethanol costs increase biofuels firms' value. We also find non-monotonic relationships between the value of an ethanol plant and several underlying variables, including gasoline price level. We estimate the value provided by a 10% blend mandate to be around $150,000,000 for a representative ethanol unit. Our results offer a novel view of oil and feedstock price risks in contrast to the common belief that considers those risks as a negative factor for the biofuels sector.

An in-situ electropolymerization based sensor for measuring salt content in crude oil

Determining salt content is a vital procedure in the petroleum industry during the process of crude oil transportation, refining and production. Monitoring the salinity value using a fast and direct technique can substantially lower the cost of crude oil in its processing and its production stages. In the present work, a novel analytical method was developed to detect the amount of salt present in crude oil in a quick and reliable manner. The measurement is based on the rate of in-situ electropolymerization of a monomer such as aniline in association with the salt content in the crude oil. The salt dispersed in the hydrocarbon matrix is used as an electrolyte in the electrolytic system to induce an electropolymerization reaction upon the induction of voltages, in which the salt content is measured corresponding to the polymeric film formation on the working electrode surface. Acetonitrile and N-methylpyrrolidone (NMP) were used in the electrochemical cell as solvents, and cyclic voltammetry tests were performed for Arabian crude oil solutions in the presence of aniline. The method has shown an excellent detection response for very low concentrations of salt. Four Arabian crude oils with salt concentrations of 34.2, 28.5, 14.3 and 5.71mgL−1 have produced current intensity of 180.1, 172.6, 148.1 and 134.2µA at an applied current potential of 1.75V (vs. Ag/AgCl), respectively. A Calibration curve was obtained in the range of 5–35mgL−1, giving limits of detection and quantitation at 1.98 and 5.95mgL−1, respectively. The in-situ electropolymerization based sensor has significant advantages over the existing techniques of salt monitoring in crude oil such as fast response, temperature independency, electrode stability, and minimum sample preparation.

Study on the Impact Factors of Microbial Oil Displacement Efficiency

In order to quantify the microbial oil displacement efficiency, a group of petroleum-degrading bacteria were obtained from the sludge samples. Three strains of them with maximum degradation performance were tested to determine how the concentration of bacteria and nutrition affect the oil displacement efficiency. The volume of oil displaced by different strain was measured to find the rules of oil displacement efficiency change with time. From a practical point of view, the research found that there exist an optimum value between the oil displacement efficiency and concentration of bacteria and nutrient, which was related to crude oil price and cost of biological agents.

The compatibility of potential bioderived fuels with Jet A-1 aviation kerosene

Environmental concerns and the rising cost of crude oil have incentivized the search for alternative aviation fuels. However, any potential alternatives must be thoroughly characterized and tested. In this investigation nine potential biofuels derived from sustainable sources were tested for their compatibility with Jet A-1 aviation kerosene. The fuels chosen were n-butanol, n-hexanol, butyl levulinate, butyl butyrate, ethyl octanoate, methyl linolenate, farnesene, ethyl cyclohexane and limonene. Viscosities were determined between −30 and 40°C and were observed to increase with decreasing temperature roughly in accordance with ideal fluid behavior. Cloud point temperatures of all samples were tested and all fuels except n-butanol and methyl linolenate were found to be below the specification maximum. Flash points of all fuels apart from pure and blends of ethyl cyclohexane and n-butanol were found to be greater than 38°C, the minimum threshold specified in the standard. Of all the samples only the hydrocarbon fuels met the required energy content minimum with energy content decreasing with increasing oxygen content. The effect of each fuel on the range vs. the payload, relative to Jet A-1 was determined using a simplified model in order to ascertain likely impact of adoption upon airline operations. Only limonene fulfilled all the requirements of an alternative aviation fuel, though butyl butyrate and ethyl octanoate were acceptable except for the reduced energy density.

The Research on Improving the Efficiency of Injection-Production of the Lamadian Oilfield in Ultra-High Water Cut Stage

With the oil field developing, the water cut increased, gradually and the efficiency of injection-production reduced year by year. Since the water flooding of Lamadian Oilfield entered extra high water cut period, the distribution of flow flied become more and more complex. The distribution of remaining oil and ineffective circulation is complex. The existing of ineffective circulation led to the flooding efficiency reducing sharply and cost of crude oil per ton by water flooding increased. In order to control production energy consumption in the extra high water cut, the method of improving the efficiency of Injection-production is studied in the Lamadian oilfield. Through the analysis of injection-production status, the factors that influence the injection efficiency is studied. The distribution of ineffective circulation which seriously affects the efficiency of Injection-production is made clearly. According to the factors that influence the efficiency of injection-production, based on flow field characteristics of water flooding, the countermeasure to enhance efficiency of injection-production is put forward in order to reduce the energy consumption and cost of producing crude oil.

Oil Price Uncertainty and Industrial Production

We estimate a bivariate GARCH-in-Mean VAR with a BEKK variance specification, to investigate whether oil price volatility affects real economic activity. We use the same data set of thirty seven, aggregate and disaggregate, industrial production indices used by Herrera et al. (2011) as a proxy for real output and a post-1973 data sample. We check the robustness of our results by using two proxies for the price of oil, the West Texas Intermediate (WTI) oil price and the Refiners’ Acquisition Cost (RAC) of crude oil, and by testing for both nominal and real effects. We find significant evidence of nonlinearities for both aggregate and disaggregate indices. Our research highlights the importance of nominal prices and extreme events such as the Great Recession in the transmission of nonlinearities. Our results show that nonlinear impacts of the price of oil on the aggregate economy vary according to time period even within the post-1974 data. Since 2000, oil price volatility is up markedly, but the number of industries it impacts is down when compared with the full sample. This is in keeping with what one would expect, based on trend improvements in GDP per unit of energy use. However, for those series, where oil price volatility is significant, the impact of oil volatility is substantially higher than in the full sample; this runs contrary to what one might expect from the observed GDP per unit of energy use improvements.

A process-based model for estimating the well-to-tank cost of gasoline and diesel in China

In this paper, we present a process-based model to estimate the well-to-tank (WTT) costs of vehicle fuels (gasoline and diesel). The model breaks down the WTT process into four stages, i.e., crude oil sourcing (import and extraction), crude oil transportation, crude oil refining, and vehicle fuel transportation and distribution, which can provide high-resolution data for the WTT cost components. Using this model, we further develop an empirical study of China. The results obtained from the study indicate that the price of imported crude oil is the dominant factor affecting the WTT costs of vehicle fuels in China and that the cost of crude oil refining also has a relatively large influence. By comparing the costs with the prices of vehicle fuels under the volatile price of imported crude oil, we illustrate the unstable margin caused by China’s current pricing policy, which causes a distorted price signal and fiscal risks. The key findings derived from the empirical study reveal that the WTT cost is an essential guide for altering the vehicle fuel price with the aim of not only smoothing the impacts caused by the volatile price of crude oil price but also reflecting the correct oil price signal and reducing the fiscal risks.

An integrated fuzzy regression-data envelopment analysis algorithm for optimum oil consumption estimation with ambiguous data

This study introduces an integrated fuzzy regression (FR) data envelopment analysis (DEA) algorithm for oil consumption estimation and optimization with uncertain and ambiguous data. This is quite important as oil consumption estimations deals with several uncertainties due to social, economic factors. Furthermore, DEA is integrated with FR because there is no clear cut as to which FR approach is superior for oil consumption estimation. The standard indicators used in this paper are population, cost of crude oil, gross domestic production (GDP) and annual oil production. Fifteen popular and most cited FR models are considered in the algorithm. Each FR model has different approach and advantages. The input data is divided into train and test data. The FR models have been tuned for all their parameters according to the train data, and the best coefficients are identified. Center of Average Method for defuzzification output process is applied. For determining the rate of error of FR models estimations, the rate of defuzzified output of each model is compared with its actual rate consumption in test data. The efficiency of 15 FR models is examined by the output-oriented Data Envelopment Analysis (DEA) model without inputs by considering three types of relative error: RMSE, MAE and MAPE. The applicability and superiority of the proposed algorithm is shown for monthly oil consumption of Canada, United States, Japan and Australia from 1990 to 2005.

Energy consumption forecasting using a bi-objective fuzzy linear regression model

In this paper, a new bi-objective fuzzy linear regression model is proposed in order to fill the gap in the field of forecasting using possibilistic programming. Additionally, the proposed model is compared with three promising fuzzy linear regression models from literature in order to forecast the energy consumption in USA, Japan, Canada, and Australia during 2010 to 2015. In the fuzzy regression models, independent variables are population, cost of crude oil, gross domestic production (per capita), and annual energy production where dependent variable is energy consumption. In order to train the models and estimate their parameters, historical data from 1990 to 2005 are used for each country. Then, the models performance in energy consumption forecasting is tested using actual data from 2006 to 2009. Based on results of mean absolute percentage error (MAPE), the proposed model outperforms other models. Finally, the energy consumption in USA, Japan, Canada, and Australia is forecasted for 2010 to 2015 using the proposed model. The results show that the proposed model provides accurate solution for energy consumption problem.

Use of Palm oil Biodiesel Blends as a Fuel for Compression Ignition Engine

Problem statement: The increasing awareness of the environmental hazards and the alarming levels of air pollution have led to more restrictive regulations on engines emission control in recent years. Approach: The dwindling resources and rising cost of crude oil had resulted in an intensified search for alternate fuels. In the present study biodiesel (palm oil methyl ester) blends with diesel was investigated in a direct injection stationary diesel engine. The stationary engine test bed used consists of a single-cylinder four stroke diesel engine, eddy current dynamometer with computer control data acquisition system and exhaust emissions analyzer. Results: Engine tests were conducted at constant speed using neat diesel fuel and various proportions of biodiesel blends. The exhaust emissions such as CO, HC and NOx were measured using exhaust gas analyzer. Performance characteristics like brake thermal efficiency and specific fuel consumption were recorded. The differences in the measured emissions and performance of the biodiesel-diesel fuel blends from the baseline operation of the engine, i.e., when working with neat diesel fuel were determined and compared. Conclusion: It is concluded that the lower blends of biodiesel increased the brake thermal efficiency and reduced the fuel consumption. Biodiesel blends produces lower engine emissions than diesel. From the result, it has been established that 20-40% of palm oil biodiesel can be use as a substitute for diesel without any engine modifications.

Scheduling of crude oil operations under demand uncertainty: A robust optimization framework coupled with global optimization

AbstractScheduling of crude oil operations is an important component of overall refinery operations, because crude oil costs account for about 80% of the refinery turnover. The mathematical modeling of blending different crudes in storage tanks results in many bilinear terms, which transform the problem into a challenging, nonconvex, mixed‐integer nonlinear programming (MINLP) optimization model. In practice, uncertainties are unavoidable and include demand fluctuations, ship arrival delays, equipment malfunction, and tank unavailability. In the presence of these uncertainties, an optimal schedule generated using nominal parameter values may often be suboptimal or even become infeasible. In this article, the robust optimization framework proposed by Lin et al. and Janak et al. is extended to develop a deterministic robust counterpart optimization model for demand uncertainty. The recently proposed branch and bound global optimization algorithm with piecewise‐linear underestimation of bilinear terms by Li et al. is also extended to solve the nonconvex MINLP deterministic robust counterpart optimization model and generate robust schedules. Two examples are used to illustrate the capability of the proposed robust optimization approach, and the extended branch and bound global optimization algorithm for demand uncertainty. The computational results demonstrate that the obtained schedules are robust in the presence of demand uncertainty. © 2011 American Institute of Chemical Engineers AIChE J, 58: 2373–2396, 2012

Continuous‐time modeling and global optimization approach for scheduling of crude oil operations

AbstractScheduling of crude oil operations is a critical and complicated component of overall refinery operations, because crude oil costs account for about 80% of the refinery turnover. Moreover, blending with less expensive crudes can significantly increase profit margins. The mathematical modeling of blending different crudes in storage tanks results in many bilinear terms, which transforms the problem into a challenging, nonconvex, and mixed‐integer nonlinear programming (MINLP) optimization model. Two primary contributions have been made. First, the authors developed a novel unit‐specific event‐based continuous‐time MINLP formulation for this problem. Then they incorporated realistic operational features such as single buoy mooring (SBM), multiple jetties, multiparcel vessels, single‐parcel vessels, crude blending, brine settling, crude segregation, and multiple tanks feeding one crude distillation unit at one time and vice versa. In addition, 15 important volume‐based or weight‐based crude property indices are also considered. Second, they exploited recent advances in piecewise‐linear underestimation of bilinear terms within a branch‐and‐bound algorithm to globally optimize the MINLP problem. It is shown that the continuous‐time model results in substantially fewer bilinear terms. Several examples taken from the work of Li et al. are used to illustrate that (1) better solutions are obtained and (2) ε‐global optimality can be attained using the proposed branch‐and‐bound global optimization algorithm with piecewise‐linear underestimations of the bilinear terms. © 2011 American Institute of Chemical Engineers AIChE J, 2012

Modification of aqueous enzymatic oil extraction to increase the yield of corn oil from dry fractionated corn germ

In previous aqueous enzymatic oil extraction (AEOE) experiments we reported a best free oil yield of 49% of the hexane extracted yield of dry fractionated corn germ. In the current experiments, a dispersion of 10% cooked, dry-fractionated germ in water was treated with α-amylase, glucoamylase and a cellulase complex. Free oil was collected by centrifuging a foam fraction of the dispersion. Several dispersion treatments were tried to evaluate their release of free oil and effect on the production of foam. The foam contained up to 8% free oil (dispersed from germ containing 26% oil) and fines oil (not centrifugally separable), protein and germ particles. Treatment with α-amylase and glucoamylase prior to treatment with the commercial cellulase used in previous AEOE studies increased the free oil yields about 25–61% of the hexane-extractable yield. A preliminary cost analysis indicates that oil separation with the amylase enhanced AEOE appears to be preferable to AEOE alone and profitable if crude corn oil cost exceeds $1.1/kg ($0.50/lb).

A comparative assessment of fuzzy regression models: the case of oil consumption estimation

The objective of this study is to examine the most well-known FR approaches with respect to oil consumption estimation. Furthermore, there is no clear cut as to which approach is superior for oil consumption estimation. The economic indicators used in this paper are population, cost of crude oil, gross domestic production and annual oil production. The data for oil consumption in Canada, USA, Japan and Australia from 1990 to 2005 are considered. The input data are divided into train and test data. The FR models have been tuned for all their parameters according to the train data and the best coefficients are identified. Three popular defuzzification methods for defuzzifying outputs are applied. For determining the rate of error of FR models estimations, mean absolute percentage error is calculated. This study reveals that there is no best FR model unlike previous studies which claim to have developed the most efficient FR models.

Operating cost analysis of an annexed ethanol distillery in a rural, landlocked African country

Given the high cost of crude oil, uncertainties regarding future reserves as well as the phenomenon of global warming, alternative fuels such as bioethanol need to be developed and deployed. This work presents an economic analysis (operating cost analysis) of one annexed African distillery operating in a landlocked and rural location. Specifically, the study attempts to analyze the impacts that some of the critical factors influencing bioethanol production will have on its viability and also present an analysis of the breakdown of the operating costs of the distillery, in an equation format to enable easier and more rapid use of the data in numerical and economic models, and in the preliminary design and optimization of bioethanol plants. The cost of ethanol production was estimated at $19.57/HL with cost of feedstock (molasses “type C”) constituting about one third of the production cost. The study also identified other major, intermediate, and minor input factors, which can provide insights to both the possible barriers to implementation that should be overcome, and on the technological improvement options that should be stimulated by research and development in ethanol industry. Finally, from the operating cost analysis of the annexed distillery, it emerged that the factorial approach to estimation is principally a sound one, with no indication of untypical cost items. Some of the typical cost items do however display ratios to the base cost that are outside of previously reported limits. © 2010 American Institute of Chemical Engineers Environ Prog, 2011

Fuel costs and supply chain decisions

The affect of rising fuel costs on the individual consumer is well documented in current media. Consumers are paying more for their basic necessities. Fuel surcharge, transportation cost, and logistics have become house hold words. The rising cost of crude oil creates an increase in fuel cost, and this creates an increase in the cost to transport products from one location to another. Managers, who are responsible for acquiring products and delivering them to customers, are also feeling the impact of higher fuel prices. This article will outline three significant areas where fuel prices are affecting U.S. supply chain decisions. Sourcing decisions, transportation modes, and product design and packaging practices are all currently being influenced by the cost of logistics.

Composition-Explicit Distillation Curves for Mixtures of Gasoline and Diesel Fuel with γ-Valerolactone

Interest in the domestic production of bioderived fuels, sparked by the high cost of petroleum crude oil, the potential of supply disruptions, and fears about climate change has led to consideration of fluids to replace or extend conventional petroleum derived fuels. While ethanol as a gasoline oxygenate and extender has received a great deal of attention, this fluid has numerous problems such as aggressive behavior toward engine components and a relatively low energy content. Many other fluids have been considered as oxygenates for gasoline, such as the butanols, ethers, and other alcohols. For diesel fuel, oxygenates have included glycol ethers, glycol esters, carbonates, acetates, and ethers. Some of these oxygenates and extenders can be made from biomass and are thus renewable and in some cases can decrease the overall carbon dioxide budget. One new renewable fluid being considered as both a gasoline and diesel fuel oxygenate is γ-valerolactone. In this paper, we present a characterization of selected mixtures of γ-valerolactone in both gasoline (mixtures of 10, 20, and 30%, vol/vol) and diesel fuel (1 and 2.5%, vol/vol), performed with the advanced distillation curve metrology. This method features: (1) a composition explicit data channel for each distillate fraction (for both qualitative and quantitative analysis); (2) temperature measurements that are true thermodynamic state points that can be modeled with an equation of state; (3) temperature, volume, and pressure measurements of low uncertainty suitable for equation of state development; (4) consistency with a century of historical data; (5) an assessment of the energy content of each distillate fraction; (6) trace chemical analysis of each distillate fraction; and (7) corrosivity assessment of each distillate fraction. We discuss the effect of γ-valerolactone on the vapor−liquid equilibrium (volatility) of the mixtures.

Liquefied Petroleum Gas as an Alternative Vehicle Fuel in Ghana

This work discusses the advantages and disadvantages of three types of fuels: petrol, diesel, and liquefied petroleum gas (LPG). Two surveys were conducted; one in the Tarkwa Municipality in the Western Region of Ghana to assess the type of fuels that taxis run on, and the other at Suame Magazine in Kumasi and Kokompe in Takoradi to verify the cost of converting a petrol engine to an LPG engine. An economic analysis carried out during the study showed that the business of taxis using petrol as fuel is not viable, for a taxi using diesel, the business is fairly viable, whereas for a taxi using LPG as fuel, the business is very viable and lucrative. In the face of the rising cost of crude oil globally, and taking cognizance of the fact that the cheaper LPG could be produced in Ghana, it is recommended that taxis should use LPG as fuel.