Delek adds unit at
Downstream Technology Editor
Delek US Holdings Inc., Brentwood, Tenn., is building an
alkylation unit to add product flexibility and increase margin potential at its 74,000-b/sd refinery in Krotz Springs,
Already under construction, the 6,000-b/sd alkylation
unit will convert isobutane into alkylate to enable production of multiple summer grades of gasoline as well as boost
octane levels, according to a Jan. 9 filing by Delek with the
US Securities and Exchange Commission.
Addition of the unit will increase gasoline production at
the refinery to 44,000 b/sd from 38,400 b/sd while simultaneously reducing output of lower-value products to 8,700
b/sd from 11,100 b/sd, the filing said.
The alkylation project, which will cost an estimated
$103 million, is scheduled to be completed in first-quarter
Alongside the new alkylation unit, Delek also is exploring other improvement initiatives for Krotz Springs, including a transportation project aimed at reducing costs for
crude deliveries into the refinery as well as a crude flexibility project to increase the site’s ability to access lower-cost
crude grades, according to the presentation.
While the operator disclosed no further details about
the crude transportation initiative, with regard to expanding crude flexibility, Delek said it is working with its logistics subsidiary to enable Krotz Springs to adjust its crude
processing slate between Light Louisiana Sweet and West
Texas Intermediate Midland crude grades based on market
conditions and refinery runs.
Regarding its idled refining installations in Paramount
and Long Beach, Calif., Delek said it is evaluating options
to divest the assets as well as considering options to lower
carrying costs of ongoing nonrefining operations at its Bakersfield, Calif., site.
The filing follows Delek’s Jan. 8 announcement of an
internal consolidation measure to simplify corporate structure whereby Delek will acquire remaining limited partner
units of Alon USA Partners LP.
Delek already owns 81.6% of Alon USA Partners’ outstanding units through its July 2017 acquisition of Alon
USA Energy Inc. (OGJ Online, July 3, 2017; Jan. 3, 2017).
the forecast suggests demand will rise the most in China and
India through 2040.
The outlook forecasts that global crude oil demand will
climb to 102.3 million b/d by 2022 from 94.5 million b/d in
2016. Al-Qahtani said it appears likely to rise more quickly
through 2020, when International Maritime Organization
regulations for bunker fuels are due to take effect and more
low-sulfur diesel fuel could be needed.
“In the longer term, we expect demand to reach 111.1
million b/d by 2040,” he said. “Most of this will be in trans-
portation, where competition from alternative fuels is weak-
The number of passenger cars worldwide could double by
2040, largely driven by increases in economically develop-
ing countries, with electric vehicles representing 12% of the
global fleet, Al-Qahtani said.
“Downstream, refining capacity could increase by 19. 6 million b/d by 2040, with Asia-Pacific and Middle East countries accounting for almost 70% of the total,” he said. “We
expect refiners to add capacity in the middle of demand
centers because that’s where the customers are.” About $1.5
trillion of investments will be needed to accomplish this by
2040, he said.
Al-Qahtani said OPEC anticipates that total worldwide
energy demand will climb 35%, or about 96 million boe/d,
through 2040. Crude oil appears likely to remain dominant
as natural gas gains the most ground. “Fossil fuels are ex-
pected to remain dominant,” he said. “We expect technol-
ogy, as well as policies, to continue driving emissions reduc-
tions and energy efficiency.”
Developing countries also appear likely to drive long-
term economic growth globally, Al-Qahtani said. “Demand
in [Organization for Economic Cooperation and Develop-
ment] countries should peak in the early 2030s as their gov-
ernments try to move from oil and coal to renewables out of
climate concerns,” he said.
Responding to an audience member’s question, Al-Qahtani said it is OPEC’s policy not to try and predict specific
prices. “We know that costs are going up, and we’re running
out of cheaper supplies. That suggests prices will be higher,
even without additional taxes,” he said.
“Predicting depletion rates is difficult. It’s hard to predict
when you’ll run out of a resource,” he said. “I think profit-
ability is the most important factor in deciding how long to
Frank A. Verrastro, a senior vice-president and trustee
fellow at CSIS who moderated the discussion, said, “A lot
has changed in the last decade. The US clearly has a different
role now than it did before, but it also faces a lot of above-
ground challenges. How these are handled could determine
how long this country’s new market position will last.”