The first oil refinery was built in the 19th century, and was destroyed by the Allies during World War II. The refinery was bombed as part of Operation Tidal Wave during the so-called Oil Campaign of World War II. By depriving Nazi Germany of its ability to refine oil, the Allies hoped to shut down Hitler’s war machine. That’s because oil refineries are an essential hub of downstream oil and gas businesses, which involve the processing, transport, and sale of refined gas. Therefore, without oil refineries, the downstream segment of the oil and gas industry would cease to function at all.
So what do oil refineries do, and exactly what role to they play in the petroleum industry? For anyone looking for a beginner’s introduction to the subject, we’ll offer a quick review of the facts, an “Oil 101” overview.
First, exploration and production oil companies (the upstream gas and oil industry) remove crude oil from the ground. However, crude oil has limited applications, and so it must be refined into other petroleum products, everything from kerosene to asphalt. So how does an oil refinery process crude oil into the gasoline that powers your car, for instance?
Any oil refinery receives crude oil, which contains many different types of petroleum derivatives. When the crude oil is heated, these elements are separated into “fractions” because of their different boiling points. The oil refinery then uses specialized equipment to separate fractions like fuel oil, diesel, gasoline, propane, and more. Once these fractions are isolated and separated, they are purified and filtered. Once this process is complete, they can be transported and packaged for sale.
In the 19th century, the average oil refinery simply wanted to remove kerosene from crude oil, and other byproducts (like gasoline) were simply dumped into whatever river was most convenient. Obviously, environmental regulations have since put a stop to practices like that.
In short, an oil refinery is a chemical plant that transforms the oil removed from oil fields and rigs into the fuel products you use in your home, car, tools, and even the asphalt you drive on every day.