NPRA: US refining capacity climbed 0.6% in 2006

Nick Snow
Washington Correspondent

WASHINGTON, DC, Aug. 22 -- US refining capacity grew 0.6% during 2006 to 17.4 million b/cd of distillation capacity and 18.4 million b/sd as of Jan. 1, reported the National Petrochemical & Refiners Association Aug. 22 in its annual refining and storage capacity report. The figures exclude capacity in Puerto Rico and the US Virgin Islands.

The trend of adding capacity to existing refineries has continued, said NPRA Executive Vice-Pres. Charles T. Drevna. "While it's true that a brand new refinery hasn't been built since 1976, we've actually, on the aggregate, built the equivalent of one new world-class refinery each year for the past 14 years," he said.

Capacity at 149 operable US refineries at the beginning of this year was 3.9% higher than 5 years earlier and 12.9% higher than at the beginning of 1997, according to NPRA, which used figures compiled by the US Energy Information Administration in its 2007 Petroleum Supply Annual.

However Drevna said expanding domestic capacity has become more challenging because of more-stringent regulations, and the permitting process remains complex and uncertain.

Policymakers also send conflicting signals when they call for more capacity on one hand and 20% cuts in gasoline consumption over 10 years on the other, he observed.

"Refiners make their reinvestments today based on where they see demand headed. If policymakers take actions that significantly decrease consumption, domestic refiners will naturally consider the wisdom of investing in new capacity or facilities only to have those investments stranded in a decade or less," Drevna said.

Contact Nick Snow at nsnow@cox.net.

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