The Louisiana Oil and Gas Industry Growth: Refineries & Petrochemical Plants
July 8, 2013
In the previous installments of this article series we have looked at an overview of the overall petroleum industry of Louisiana. This has included its natural gas and crude oil production, importation, storage, and the shipping and receiving capacities. The final key element for our coverage of Louisiana’s Oil & Gas boom is its downstream sector, the refineries and petrochemical plants that are ultimately responsible for converting the oil and gas into viable products for everyday consumers. Let’s take a look at Louisiana's contribution and role in this pivotal area of energy processing and use.
In order for crude oil to meet its full potential it must be refined. Over the decades Louisiana has built up both the number of its refineries as well as the technological capacity of these refineries. In fact Louisiana has 18 operating refineries. This places it second only to Texas in both total refineries and operating capacity. These refineries are strategically located primarily along the Lower Mississippi River where they have access to major ports and shipping. There is also a high concentration in the Lake Charles area because of the abundance of industrial facilities and labor force servicing the unique needs of the plants.
Louisiana has a vast refining capacity compared to most other states. Combined, Louisiana refineries have an output capacity of more than 3 million barrels per day. This makes Louisiana the second largest petroleum product producing state, behind only Texas. However, while this capacity itself is both impressive and significant, it is the sophistication of Louisiana’s facilities that truly help it shine. Louisiana’s facilities feature many enhanced refining processes that far exceed simple distillation. This allows them to yield a larger quantity of lighter, higher value products, such as gasoline.
Because of its advanced downstream capabilities Louisiana has become the destination of a large variety of different crude oil types from all around the world. Often this crude oil is much heavier, and much lower in value. However, Louisiana’s refineries are able to convert these substances into valuable, useful products. As a result of this booming downstream sector, over half of Louisiana’s refined petroleum products are ultimately exported to other states for consumption.
Supplying A Nation
In order to export all of these newly refined petroleum products, Louisiana relies on a vast network of pipelines. One of the main pipelines is the Plantation Pipeline originating near Baton Rouge and reaching its final destination in the Washington DC area. Along this extensive route it passes through several major metropolitan areas and supplies much of the South with motor gasoline and distillate fuel. Other major pipeline systems passing through Louisiana include the Colonial, Centennial, and TEPPCO systems.
Bustling Industrial Sector
However, while Louisiana does indeed play a very big role in supplying the rest of the nation with petroleum products, it retains many of these precious fluids for its own bustling industrial sector. These non-shipped products feed Louisiana’s numerous plants and industrial facilities. In fact Louisiana has one of the largest petrochemical industries in the entire nation. Louisiana also has a thriving manufacturing sector which also utilize the state’s petroleum output.
Louisiana’s refinery, oil and gas boom is easily explained by the major benefits and advantages of the state we've listed throughout this series. These conditions could easily sustain Louisiana’s bustling industrial and chemical sectors for the foreseeable future. The state is also further safeguarding its position and ramping up its economy even more, by focusing on the future growth potential. There are currently two noteworthy future facilities that look likely to materialize:
-The Sasol Chemical Plant - Sasol is a company which produces an array of commercial products such as transportation fuels, paints, medical lasers, and even perfumes and detergents. Sasol is proposing the construction of an integrated gas-to-liquids and ethane cracker complex that would be located in Westlake, Louisiana near Lake Charles.
-The Virtual Engineering Operations (VEOPS) Refinery - This proposed refinery will be located in Oakdale, Louisiana at the site of a now-defunct chemical plant called the Arizona Chemical Plant. This new refinery would help increase Louisiana’s refinery capacity and output to an even higher level. Plans include a two phase construction project which would initially establish a 20,000 barrel-a-day refinery. The second phase would add another 20,000 barrel-a-day refinery.
These exciting projects coupled with the state’s already existing infrastructure, resources, and output combine to make Louisiana a very important player in the national petroleum industry. As future technologies and opportunities become available it seems likely that the state will continue its impressive growth and remain a significant part of the nation’s energy sector for a long time to come. Ultimately this will benefit not just Louisiana's own economy, but very likely the U.S. economy as a whole, and the Oil and Gas Industry specifically.