Even as oil and gas companies profits soar, refineries across the country are being retired and converted to other uses as owners balk. Refining capacity in the U.S. is about a million barrels a day below what it was prior to the pandemic. Five refineries have shut down in the past two years, reducing the nation's refining capacity by about 5% and eliminating more than 1 million barrels of fuel per day from the market, leaving the remaining facilities straining to meet demand. The solutions we offer can be scaled up or down depending upon the size and scope of the refinery, and can play a key role in helping to ensure that the oil refineries of yesterday help to play a part in the green fuel revolution of tomorrow. You stop making it. And that's when you shut down refineries," says Denton Cinquegrana, chief oil analyst at Oil Price Information Service. The Environmental Protection Agency under President Joe Biden is set to abruptly issue a sweeping denial of economic hardship exemptions to the Renewable Fuel Standard (RFS) program from small oil refineries around the U.S., likely forcing one Texas refinery to go out of business at a time when American energy independence is desperately needed. Limetree Bay Energy shut its St. Croix refinery due to financial problems in May 2021 after only operating for a few months, due to operational setbacks. U.S. refineries are already going gangbusters right now. Not that the problem is confined to the US, with closures some tagged as temporary at the time also happening across Europe and in Australia. Stay tuned. In Germany, the Heide refinery has reduced staff numbers by 106 positions, but is looking to the future with confidence due to plans to change the business model of the plant to concentrate on the production of green hydrogen. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. A Philadelphia refinery, one of the largest in the country, was rocked by explosions a few months before the pandemic. Although the short term issues may well have been driven by the temporary impact of the pandemic, a study published as long ago as 2017 predicted exactly how things were going to unravel across the oil refining sector, with the key driver of change being a global switch away from fossil fuels prompted by concerns about climate change. Thus, the President whose administration has been actively trying to limit the domestic oil industrys ability to get its business done is now so desperate to shift blame for high gasoline prices that he resorts to the pretense of being disappointed that that has been happening. UPDATE: This article has been updated to include comment from LyondellBasell Industries on its plans to cease operations in 2023. 2008-2023 - Shore News Media & Marketing Ltd. Co. All rights reserved. "I think the refining executives say, well, looks like the writing's on the wall," Cinquegrana says. France's TotalEnergies reported higher refinery throughput in Q3 amid improved margins. Those that remain are running at 94% capacity. The industrial landscape for oil refineries has been challenging of late, with the Covid-19 pandemic triggering a massive slump in demand for oil which resulted in many refineries across the world having to temporarily shut down. Four concurrent production shutdowns in California is unfortunate timing, but its impossible for refineries to schedule maintenance around each other, said Severin Borenstein, a UC Berkeley energy economist. Valero's (NYSE: VLO) Texas City 225,000 bpd refinery has also shut down. In fact, some refiners have repurposed their facilities, where instead of making gasoline from oil, they're ramping up to produce renewable diesel and sustainable aviation fuel out of feed stocks like soybean oil and used cooking oil. It isnt as if these facilities have been idle. Covid and oil demand took divergent directions in mid-2020. Overall, operating U.S. refineries had a capacity of about 17.7 million bpd of oil and produced about 9.5 million bpd of gasoline, 4.7 million bpd of diesel fuel and 1.3 million bpd of jet fuel in 2021. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. Five refineries have shut down in the United States in just the past two years, reducing the nation's refining capacity by about 5 percent and eliminating more than 1 million barrels of fuel. We will remove any comments or commenters that do not follow this commenting policy. Refineries Shutting Down South Africa is refining less crude oil and only two refineries remain operational as it has become increasingly expensive to operate refineries and more. The refinery processes 268,000 barrels per day (bpd) of oil and produces 92,600 . While the Biden administration says market manipulation by Big Oil is behind the shortage of refined fuel right now, the . Its forward progress could shut down that regions refineries. Eduardo Munoz Alvarez/Getty Images Refiners turn crude oil into usable products like gasoline, diesel, and jet fuel. Elsewhere in the world, capacity has shrunk by 2.13. David Blackmon is a Texas-based public policy analyst/consultant. 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Shutdowns, or at. They said the numbers just didn't work, and closed up shop. Overall, its throughput in Q3 was 1% up on the year at 1.225 million b/d, but 29% down from 2019. For licensing opportunities of our original content, please contact Daily Caller News Foundation, Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher thatcan provide a large audience. Of course, high demand combined with high prices has led oil companies to make big profits. Dow and X-energy to build U.S. Gulf Coast nuclear demonstration plant, Oil slips as rising supplies balance Chinese demand hopes, Reporting by Laura Sanicola No off-topic remarks. Russia's invasion of Ukraine has helped drive gasoline prices to new heights, and last week, Marketplace's Andy Uhler wrote that some U.S. refineries shut down for good after prices hit rock . The national average price of gasoline surpassed $5 a gallon for the first time ever this month. During the past week alone, according to some industry insiders, prices at the pump have jumped by more than 50 cents. Both have been shut down. HOUSTON, April 21, 2022 /PRNewswire/ -- LyondellBasell (NYSE: LYB) . CRONIN: That's Patrick. In 2011, the refinery was idled. So President Biden wants them to do more to bring down the price of gasoline. Opinions expressed by Forbes Contributors are their own. Fire broke out in the early morning that triggered a vat of butane to ignite with an explosion so large that it was detected from space. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. TOLEDO, Ohio (WTVG) - The company operating a pipeline serving Midwest refineries says it's ignoring an order by Michigan's governor to shut down as she threatens to go after the company's. Refineries Shutting Down. The refinery that subsequently grew at the junction of the Delaware and Schuylkill Rivers today occupies 1,300 acres of urban South Philadelphia landscape, an area that is larger than the. Bidens letter does appear to recognize that the U.S. refining industry is already currently operating at near-full capacity as the industry has worked overtime to meet consumer demand for its products. Change), You are commenting using your Twitter account. In the interim, the company will continue serving the fuels market, which is expected to remain strong near-term.. The Biden administration envisions a future where the world is powered by clean energy rather than oil with its destructive effect on the environment. In a recent interview with Fox Business, American Petroleum Institute President Mike Sommers stated that 11 US gas refineries closed over the past two years. Get access to more than a decade of story archives. Lyondell could permanently close the refinery ahead of the December 2023 deadline if one of several major production units is shut and cannot quickly return to production. That would be a pretty clear antitrust violation, Borenstein said. Massive Oil Refinery On Track To Shut Down Amid Fuel Supply Shortages, Record Prices Thomas Catenacci on June 7, 2022 UPDATE: This article has been updated to include comment from LyondellBasell Industries on its plans to cease operations in 2023. According to the International Energy Agency (IEA . HOUSTON, Texas (KTRK) -- LyondellBasell is leaving the refining business. She recalled paying closer to $5.25 per gallon less than two weeks ago. "At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable," the president wrote in a letter to the heads of seven oil companies earlier this month. It would take months to bring the refineries back online, and it would be costly for the refiners. Additionally, refining investment is still underway. The refinery is among the top 25 largest-capacity facilities in the U.S., according to the Energy Information Administration. 'Massive' violations in Ukraine a focus as UN human rights body meets, Court rules New York law violates family planning centers rights, SUZANNE DOWNING: Biden Is Throwing Americans Retirement Savings To The Wolves. if(window.innerWidth <= 1023){ They're operating above 90% capacity according to the Energy Information Administration, and expected to run at 95% for the rest of the summer. Click Manage settings for more information and to manage your choices. 2022 Welcome: Official Visitors Guide to Greater Baton Rouge. The Presidents letter goes on to ask the companies to come up with ideas to address issues relating to prices, inventories and refining capacity, and orders Energy Secretary Jennifer Granholm to convene an emergency meeting on the matter. Just last Friday, in its response to Bidens intemperate attack during a speech at the Port of Los Angeles, ExxonMobil noted that it is in the process of expanding its own refining capacity in the U.S. by 250,000 bopd. Before the pandemic struck, Pennsylvania Energy Solutions shut down its refinery in Philadelphia after a massive explosion shook the 335,000 bpd facility. Dollar Tree Inc forecast annual profit well below estimates on Wednesday, hurt by elevated freight and investment costs and as consumers rein back spending on discretionary items. Santa Rosa resident Paige Hogan, 33, topped off a Honda Civic for $5.79 per gallon at an Arco station on Fourth Street. The 50-year-old refinery was severely damaged after several feet of water flooded it during the storm. PATRICK DE HAAN: There's been a tremendous challenge with the refineries being able to meet demand that has resurged as the economy continues to gain momentum post-COVID. The previous weeks average was $5.64, according to AAA. Some of its been very policy-driven and companies decided that it wasnt worth it to keep operating those assets.. The refinery's major units are its two crude distillation units (CDUs), two cokers, gasoline-producing fluidic catalytic cracker (FCC), sulfur recovery units, and certain hydrotreaters, the. The reasons for those closures are due primarily to governments. Most of the refinery closures occurred in western countries, the data showed. We, Yahoo, are part of the Yahoo family of brands. Cinquegrana from Oil Price Information Service says that from the refiners' perspective, it doesn't make financial sense to invest in additional oil refining given the broader transition. All quotes delayed a minimum of 15 minutes. Thursday, May 12, 2022. Of the three California refineries undergoing scheduled maintenance, one is in Benicia and the other two are in Los Angeles. Could Gravity Batteries Win The Energy Storage War? }. Prior to the pandemic, experts were already predicting a major downturn in the oil refinery sector across Europe, with companies having to rationalise their presence across the continent, particularly in light of the ageing nature of many of the refineries themselves. In one particularly unusual move, India's Reliance Industries said it would simply sell the crude oil that it had in transit at sea, rather than allowing the cargo to arrive at its refineries. US governments accomplished this through various methods, including increasingly restrictive environmental regulations. This is so, so frustrating, Hogan said. As for turning back on idled refineries, that's not a quick fix either. (Photo by Justin Sullivan/Getty Images). Since the start of the pandemic, statistics related to Covid-19 hospitalizations in the world "only got worse month by month . Find out more about how we use your information in our privacy policy and cookie policy. Fire smolders at an oil refinery that triggered several large explosions at the Philadelphia Energy Solutions Refining Complex on June 21, 2019. Click to become an INSIDER for under $2.00 a week. Throughput at its French refineries was up 3% on the quarter at 274,000 b/d but remained 46% down compared with 2019. 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