Why are (were?) we importing oil from Russia?
In 2021, the US imported 700,000 barrels per day (BPD) of crude and refined products from Russia. Of this, 220,000 bpd are (were?) being used by Valero as feedstocks at their refineries in Norco LA. and Port Arthur Texas. These Russian barrels are classified as products, not crude oil. My conjecture is they serve as fluid catalytic cracker (FCC) feed.
Importing FCC feed from Russia is unusual. Most US refineries make their own FCC feed which can be done by turning different valves in the refinery. These two Valero refineries are probably configured in a way that makes the Russian feed especially attractive for them.
A primary reason for importing FCC feed would be to crack it to make high margin, low sulfur, high octane gasoline. So, on the surface, it seems that not having this feed might hurt Valero’s ability to produce gasoline for the US market and capture the very high gasoline margins available in the US today.
Both these refineries have gasoline desulfurizers which destroy octane when the FCC-cracked gasoline is desulfurized. Because of the Tier 3 octane/sulfur squeeze, this factor is far more important today than ever before and would influence Valero’s ability to source an equally-attractive feed.
So I am adding these two refineries to my list of those US refineries whose profitability could probably be improved considerably by improvements in the octane/sulfur peformance of their FCC- gasoline desulfurizer process train.
This is a theory I pieced together by connecting dots between bits of public information, so am eager to hear from anyone who has better information or disagrees with this theory. george.hoekstra@hoekstratrading.com
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