U.S. Refineries Running at Record Levels
The only thing that is certain about unplanned refinery shutdowns is that they will occur. The timing, magnitude and importance of unplanned events remains mostly uncertain. Or does it? Perhaps we could argue that unplanned refinery turnarounds, even those of small magnitude, are more important during a period of low planned turnarounds such as the end of the summer driving season.
When planned turnarounds are high, the expectation for crude runs is low, and additional unplanned shutdowns will only confirm a downward bias. But, when planned turnarounds are low, the expectation is for high crude runs and the arrival of unplanned outages can wreak havoc for those that make a living by forecasting the weekly crude consumption figures.
The bulk of the week’s unplanned events occurred in Padd 3, and added to an unplanned total that was already bolstered by the brief unplanned event at Alliance.
The Alliance shutdown itself was extended and caused an increase in this week’s total. In addition, Lake Charles suffered a brief period of downtime due to a power loss.
In summary, unplanned refinery shutdowns occurred at Alliance, Whiting, and Bayway. Three powerhouse refineries. Yet all three refineries have restarted, and the US refining system could reach 18 million barrels per day milestone by the end of August.
Padd 2 experienced its own unplanned event this week, but the magnitude was quite small and overshadowed by the restart of Canton’s CDU from planned work. Coffeyville was slowed by a mechanical issue during the week, but overall Padd 2 crude runs moved 10 kbd higher during the period.
Midwest crude runs should move higher by this time next week as the only remaining shutdown remains at Superior. The only change to Padd 1’s unplanned turnaround total was a brief extension of an event that we already knew about. Bayway’s outage lasted a bit longer than expected and has affected the East Coast turnaround total for this week and next.
Midwest crude runs should move higher by this time next week as the only remaining shutdown remains at Superior.
The only change to Padd 1’s unplanned turnaround total was a brief extension of an event that we already knew about. Bayway’s outage lasted a bit longer than expected and has affected the East Coast turnaround total for this week.
The U.S. Energy Information Administration (EIA) forecasts that U.S. refinery runs will average 16.9 million barrels per day (BBL/d) and 17 million BBL/d in 2018 and 2019, respectively. Both amounts would be record highs, surpassing the 2017 annual average of 16.6 million, the agency said. Industrial Info is tracking more than $29 billion in U.S. refining projects.
U.S. refineries are running at record levels in response to robust domestic and international demand for motor gasoline and distillate fuel oil, the EIA said.
The last time the four-week average of U.S. gross refinery inputs approached 18 million BBL/d was the week of August 25, 2017. Hurricane Harvey made landfall the following week, resulting in widespread refinery closures and shutdowns along the U.S. Gulf Coast.
Despite record-high inputs, refinery utilization as a percentage of capacity has not surpassed the record set in 1998. Rather than higher utilization, refinery runs have increased with increased refinery capacity, according to the EIA. U.S. refinery capacity increased by 862,000 barrels per calendar day between January 1, 2011, and January 1, 2018.
The record-high U.S. input levels are driven in large part by refinery operations in the Gulf Coast and Midwest regions, the Petroleum Administration for Defense Districts (PADDs) with the most refinery capacity in the country.
The Gulf Coast (PADD 3) has more than half of all U.S. refinery capacity and reached a new record input level the same week as the record-high overall U.S. capacity, with four-week average gross refinery inputs of 9.5 million BBL/d. The Midwest (PADD 2) has the second-highest refinery capacity, and the four-week average gross refinery inputs reached a record-high 4.1 million BBL/d.
Oil refineries in the U.S are responding currently to high demand for motor gasoline and distillate. The four-week average of finished motor gasoline product supplied typically hits the highest level of the year in August, according to the EIA. Weekly data for this summer to date suggest that this year’s peak in finished motor gasoline product supplied is likely to match that of 2016 and 2017, the two highest years on record, at 9.8 million BBL/d. The four-week average of finished motor gasoline product supplied for the week ended August 3 was at 9.7 million BBL/d.
U.S. distillate consumption has averaged 4 million BBL/d for the past four weeks, 64,000 BBL/d lower than the five-year average level for this time of year. In addition to relatively strong domestic distillate consumption, U.S. exports of distillate have continued to increase, reaching a four-week average of 1.2 million BBL/d as of August 3. For the week ending August 3, 2018, the four-week average of U.S. distillate product supplied plus exports reached 5.2 million BBL/d.