A Comprehensive Analysis of the Global Refining Industry (Save for Later)

Refining technology originated in Europe and the United States. In its early days, petroleum was heated to extract certain fractions usable as illuminating fuels; early refining processes employed batch-type still distillation to produce kerosene for lighting. The outbreak of the American Civil War in 1861 increased demand for lamp oil and lubricants, spurring the development of the U.S. petroleum industry. Atmospheric and vacuum distillation technologies emerged successively in the 1860s—used respectively to produce kerosene and lubricants for military equipment. By the 1950s, as global reliance on petroleum evolved, processing crude oil into fuels (e.g., gasoline and aviation gasoline) became essential for economic operation. With the growth of the automotive and aviation industries—and rising demand for petrochemical products tied to daily life—petroleum refining evolved into a product structure centered on transportation fuels, lubricants, asphalt, and petrochemical feedstocks. Representative refining technologies include: 1. Thermal Cracking: The earliest thermal cracking process was patented in 1891 by Russian engineer Vladimir Shukhov. The Shukhov process used high pressure to 'crack' heavier hydrocarbon chains into lighter, shorter ones. However, it saw limited adoption at the time due to the absence of a market for light-fraction fuels (e.g., gasoline). In 1910, Americans William Burton and Robert Humphreys, working for Standard Oil at its Whiting refinery in Indiana—a facility originally built to produce lamp kerosene—developed their own thermal cracking process. This process primarily yielded gasoline, diesel, residual fuel oil, and petroleum coke. It was filed with the U.S. Patent Office in January 1913 and licensed widely to other refiners. The Burton process remained dominant for over two decades until catalytic cracking emerged. Following the end of World War I, global gasoline demand surged dramatically. Although thermally cracked gasoline was the primary choice for internal combustion engines, its excessive volatility caused engine knocking—a serious operational problem. C. P. Dubbs developed an improved thermal cracking process (the Dubbs process), operating at 400°C–460°C (750°F–860°F), which reduced coke deposition in the system, enabling longer continuous operation and fewer maintenance shutdowns. For twenty years, Dubbs licensed his patent through National Hydrocarbon Co.—later renamed Universal Oil Products (UOP). 2. Catalytic Cracking: One of the earliest pioneers of catalytic cracking was American Almer M. McAfee, who developed a process using anhydrous aluminum chloride catalysts to increase gasoline yield during distillation. McAfee’s employer, Gulf Refining Company, launched the world’s first anhydrous aluminum chloride catalytic cracking unit in Port Arthur, Texas, in 1915. Because thermally cracked gasoline contained large amounts of olefins and diolefins—which readily formed gums during storage—and because the automotive industry demanded higher fuel quality and long-term stability, catalytic cracking gradually replaced thermal cracking.

What are the development trends for the chemical industry over the next 5 to 10 years?

(https://www.basf.com/cn/zh/media/news-releases/global/2021/03/p-21-166.html) In addition to BASF’s strategy, Dow Chemical has adopted its own circular economy initiative focused on recycling petrochemical products: (https://cn.dow.com/zh-cn/news/dow-announces-multiple-projects.html) INEOS continues Dow’s circular economy strategy while prioritizing blue and green hydrogen pathways to achieve zero-carbon transformation for energy-intensive sectors that are difficult to electrify: (https://www.ineos.cn/sustainability/) Moreover, leading chemical enterprises—including Dow and BASF—are progressively implementing digital transformation strategies: they create digital twins of production lines and apply real-time dynamic optimization technologies to coordinate production planning across globally distributed facilities. This enables rapid, flexible adjustments to production execution strategies amid volatile raw material/product prices and supply chain costs—thus maximizing overall profitability. Meanwhile, the petroleum refining industry currently faces a more awkward position relative to the broader chemical sector: the rapid rise of electric vehicles has directly threatened its flagship product—gasoline. A prominent example is LyondellBasell’s recent announcement that, due to poor performance, it plans to divest all its Houston-area refining assets by the end of next year. Other major Western oil-and-gas companies have largely responded by pursuing carbon capture. Upstream giants, in particular, leverage their extensive oilfield expertise to partner with direct air capture (DAC) firms—installing DAC units adjacent to oilfields for immediate capture and permanent sequestration. Chevron’s joint DAC project with startup Svante in the Los Angeles suburbs exemplifies this approach. Occidental Petroleum and Canada’s Carbon Engineering are building the largest DAC facility in West Texas, scheduled to begin operations in 2024. ExxonMobil even claims it intends to transform Houston into America’s national carbon sequestration headquarters—responsible for storing 80% of the nation’s annual carbon capture output. Below is a map showing all operational carbon capture plants in the U.S. and Europe. Beyond the chemical industry’s electrification and circular economy initiatives—and the oil-and-gas sector’s carbon capture strategies—Finnish and Italian refining giants Neste and ENI have pursued a different path: directly replacing conventional fossil feedstocks with bio-based feedstocks to produce biodiesel, sustainable aviation fuel (SAF), and bio-naphtha. Bio-naphtha serves as a feedstock for fine chemical production. Neste recently constructed a biorefinery in Singapore—the strategic hub of Asia-Pacific—and last year introduced both its technology and bio-feedstocks into Japan via Mitsui Chemicals—indicating Finland’s considerable ambition in these new sectors, especially following Nokia’s disruption by Apple in mobile telecommunications. Below is a map showing the distribution of Neste’s and ENI’s bio-naphtha production facilities across Europe; black squares denote end-use customers—including Dow, BASF, INEOS, and others mentioned above.

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