By Liz Ruskin
Alaska’s elected leaders — including Gov. Mike Dunleavy and the Congressional delegation — say we should produce more oil on the North Slope to make up for the ban on importing Russian crude.
But energy experts say it’s not so simple. Here are three reasons why:
Imagine you’re planning to serve champagne at your wedding. Just as you’re about to head down the aisle, the caterer pulls you aside and says, “By the way, couldn’t get you champagne, but we’ve got plenty of Mad Dog 20/20.”
Well, it’s kind of like that with crude oil. There are different grades and different flavors. Some are light and flow easily. Some are heavy like sludge. It can be sweet or sour, which is about sulfur content. The specifications for crude go on and on. But the thing to know is that light and sweet is easier to refine and relatively more expensive. And refineries are fine-tuned to the particular qualities of what the companies expect to feed into them.
Ryan Kellogg, a professor of energy economics at the University of Chicago, says chemistry explains why the U.S. has been importing oil from Russia across the Atlantic.
“A lot of people wonder why we are importing Russian crude or crude from anywhere really, given how much oil the U.S. produces now,” he said. “The answer is that our refining infrastructure in the U.S. was largely built, especially in the 90s and 2000s, with advanced technology designed to process heavier, dirtier crudes, like Russian crude, like crude oil from Venezuela, like crude oil from the oil sands in Alberta, Canada.”
The refining firms, particularly the big ones that have facilities on the Gulf of Mexico, made a bad bet, he said.
“All that refinery capacity, billions of dollars, was spent long before anybody had any idea that the shale oil boom was going to be a thing,” Kellogg said.
The fracking revolution came in 2010, producing tons of crude from shale. It’s light and sweet — the expensive kind, and the kind any refinery can process. Yes, Kellogg said, refineries set up for heavy crude could retool and make use of it.
“It turns out to be cheaper to use that technology to process imported crude and export the light sweet crude to somewhere else,” he said.
Refineries also blend crude to optimize their equipment. Kellogg said importing Russian crude allows U.S. refineries to take some of the abundant shale oil and bulk it up with the dark cheap stuff so they can run more efficiently.
Alaska North Slope crude — ANS — is considered a medium, but it’s heavier than shale oil, so in theory, it could be used to darken a blend. But ….