Asphalt is produced from the heaviest parts of heavy crude, and heavy crude production in North America is growing, thanks to the Alberta oil sands. That should mean more asphalt – but instead, the opposite has happened. Eager to capitalize on the heavy crude growth, refiners across the continent have scrambled to build what’s called “coking” capacity.

Cokers take those heaviest parts of the barrel and, in simple terms, refine them into more marketable products. That leaves less of the heavy product to make asphalt – and cokers are growing rapidly. Between 2008 and 2013 alone, North America will add more than 18 per cent to its total coking capacity, according to research firm GlobalData.

The new capacity has already had an impact on asphalt, which has historically moved up and down in tandem with oil prices. While that still happens to some extent today, it has become more decoupled from crude – and road builders and asphalt suppliers worry that the future will see higher prices for asphalt.

“The decrease in supply has increased the prices at times,” said Ward Sparrow, the general manager at Vancouver’s Lafarge/McTar Petroleum, a paving contractor.

“The fundamentals for asphalt are changing all the time. Less sources are becoming available to us.”

Inside story
Plumbing the depths
Inside story: A recent wave of advances is enabling oil companies to detect and recover offshore oil in ever more difficult places

Mar 4th 2010 | From The Economist print edition

“In 2005 the company installed its Constitution platform 300km south-west of New Orleans. Moored to the ocean floor 1,500 metres below the surface, the $600m structure comprises a 13,600-tonne cylindrical floating “spar” supporting a 9,800-tonne upper section or “topside”. Constitution, which is now owned and operated by Anadarko Petroleum, an independent oil producer that acquired Kerr-McGee in 2006, has plenty of company. In 2007 BP finished work on Atlantis, a 58,700-tonne semisubmersible platform, which is tethered to the seabed over 2,150 metres below. Upon completion, the platform was the deepest-moored oil-and-gas production facility in the world.”

The book follows the pattern of oil starting with what types there are, how it was formed and where it is found. It explains with a couple of simple pictures the concept of the kerogen, oil and gas windows and then goes on to explain, from the rock formations in which it is found, how the oil and gas can be recovered. Given the amount of material that the book covers, the specific detail on any one process is sparse, but with the underlying knowledge that is provided, it then becomes possible for example, to follow a more detailed description of the steps that are taken in trying to improve production from a well driven into a shale gas field, or why we are interested in the relative production rates and lifetimes of horizontal and vertical wells.

This is useful not just to the neophyte. Just the other day when I was writing a piece on the future price of oil, I wanted to know the current percentage of world production that OPEC produced and bingo, there on Figure 5.4 was the number, 43%. The story went on to look at the demand for petroleum products as it fluctuates over the year, and there again was Figure 13.2, showing the fluctuation in vehicle miles driven, by month. (Being me, I then went back to the source he cited to get the current data, but it barely differed from what Morgan Downey had written).

Oil 101, by Morgan Downey, is without a doubt the most detailed and comprehensive book I have ever read on the oil industry. In fact, I am not aware that another book like this even exists. This is not an opinion piece, nor is it a peak oil book. It is a collection of factual information covering all aspects of the industry. From oil in the ground to product in the tanks (and everything in between) – this book contains everything you could ever want to know about the industry. I like to think I know quite a bit about different areas of the industry, but I still managed to learn a lot from this book.

It doesn’t matter if you are a complete novice or already know quite a bit about the industry; there is something for everyone in this book. Downey displays a deep understanding across all sectors of the industry. For instance, if I didn’t know better I would have guessed that the refining chapter was written by someone who had spent an entire career in the refining industry. The only books on refining that I have read that were more comprehensive were those written specifically as technical guides for running a refinery. Other areas are covered in similar detail.