Heavy vs Light Crude: The Byproduct Revenue Story

VENEZUELAN HEAVY SOUR CRUDE

API Gravity: 8-16° (Extra-Heavy)

Sulfur Content: >2.5% (Sour)

Viscosity: Molasses-thick

Metals (V, Ni): High

Extraction Cost: $20-30/barrel

Refining Cost: $15-25/barrel

📊 KEY BYPRODUCT REVENUES (per barrel)

🔥 Petroleum Coke 15-25% yield $5-8/bbl ★ BONUS

🛣️ Asphalt 10-15% yield $3-5/bbl ★ BONUS

🔧 Premium Lubricants 5-8% yield $2-3/bbl

💎 Sulfur (recovered) 2-3% yield $0.50-1/bbl

TOTAL BYPRODUCT VALUE $10-17/bbl

Product Mix Advantage:
🚛 Diesel: 40-50% (global shortage)
⛽ Gasoline: 35-40%
✈️ Jet Fuel: 8-10%

BYPRODUCT VALUE ADVANTAGE

$8-15

per barrel MORE than light crude

US LIGHT SWEET CRUDE (Shale)

API Gravity: 38-45° (Light)

Sulfur Content: <0.5% (Sweet)

Viscosity: Flows easily

Metals (V, Ni): Low

Extraction Cost: $40-90/barrel

Refining Cost: $5-10/barrel

📊 KEY BYPRODUCT REVENUES (per barrel)

🔥 Petroleum Coke 0-5% yield $0.50-1/bbl

🛣️ Asphalt <3% yield $0.50-1/bbl

🔧 Premium Lubricants 2-3% yield $1-2/bbl

💎 Sulfur (minimal) <0.5% yield $0.10-0.25/bbl

TOTAL BYPRODUCT VALUE $2-4/bbl

Product Mix Problem:
⛽ Gasoline: 55-65% (too much)
🚛 Diesel: 25-35% (insufficient)
✈️ Jet Fuel: 5-8%

BYPRODUCT VALUE

$2-4

per barrel (minimal byproducts)

💰 The Economic Reality - The values presented are approximations for illustration purposes only

Factor	Venezuelan Heavy	US Light	Winner
Byproduct Revenue	$10-17/barrel	$2-4/barrel	Heavy +$8-15/barrel
Diesel Yield	40-50%	25-35%	Heavy (Global diesel shortage)
Petcoke Revenue	$5-8/barrel	$0.50-1/barrel	Heavy +$4-7/barrel
Asphalt Revenue	$3-5/barrel	$0.50-1/barrel	Heavy +$2-4/barrel
Infrastructure Utilization	Full (cokers, hydrocrackers)	Partial (equipment idle)	Heavy ($5-8/bbl opportunity cost)
Extraction Cost	$20-30/barrel	$40-90/barrel	Heavy (cheaper at source)
Refining Cost	$15-25/barrel	$5-10/barrel	Light (cheaper to refine)

🎯 Why Gulf Coast Refineries NEED Venezuelan Heavy Crude

1. Byproduct Revenue: Heavy crude generates $8-15/barrel MORE in high-value byproducts (petcoke, asphalt, specialty lubricants)

2. Infrastructure Justification: $10B+ in coking and hydrocracking capacity sits IDLE when processing light crude (opportunity cost: $5-8/barrel)

3. Product Slate Match: Global economy needs MORE diesel, LESS gasoline. Heavy crude delivers 40-50% diesel vs 25-35% from light crude.

4. Industrial Dependencies:

Aluminum industry - depends on anode-grade petcoke from heavy crude
Cement industry - uses fuel-grade petcoke (37M tons/year exported from US)
Infrastructure - asphalt for roads, roofing comes from heavy residues
Transportation - ships, trucks, agriculture run on diesel (better yield from heavy)

⚠️ THE TRAP: US refineries invested billions in infrastructure for heavy crude. Light shale oil leaves this infrastructure underutilized and eliminates $8-15/barrel in byproduct revenue. Venezuelan heavy crude was the DESIGNED feedstock. Sanctions created an "emergency" that requires military intervention to "restore" the originally-designed system.

Total opportunity cost when running light crude in heavy-configured refineries: $16-28 per barrel ($8-15 in lost byproducts + $5-8 in idle infrastructure + $3-5 in product mix mismatch)