EIA sees impacts from idling half of Northeast's refining capacity

Reduced refining activity in the US Northeast, as reflected in recently announced plans to idle more than half of the region’s refining capacity, is likely to affect product supplies, the US Energy Information Administration said. “The transition period as supply sources shift could be problematic for ultralow-sulfur diesel [fuel], gasoline, and jet fuel supplies,” it said in a Dec. 23 analysis.

Prolonged uncertainty in the coming months over disposition and operation of pipelines, ports, storage facilities, and other important logistical assets may compound adjustment challenges, it continued. Prices could grow more volatile because of reduced short-term product flexibility due to longer delivery times and potential transportation bottlenecks from sources outside the region, EIA said. “Finally, an increase in demand for ULSD due to changing state requirements could further exacerbate supply issues,” it added.

Three southeastern Pennsylvania refineries that represent more than 50% of the Northeast’s total capacity could be sold, and two of them have been idled already, according to the analysis. It noted that Sunoco Inc. announced plans in early September to sell its plants at Marcus Hook (which it idled on Dec. 1) and Philadelphia, with the intent of leaving the refining business in 2012. ConocoPhillips Co. announced later that month that it planned to shut down its Trainer refinery prior to its sale, along with associated pipelines and terminals, EIA said.

It said that the three refineries produced a combined 315,000 b/d of gasoline, 194,000 b/d of distillate (including 143,000 b/d of ULSD and 51,000 b/d of home heating oil), and 41,000 b/d of jet fuel in 2010. “Production losses from the Trainer facility idling were offset, at least in some measure, by the return to full operations in October 2011 of the Delaware City, Del., refinery,  which had been idled since late 2009,” EIA said. “The idling in December of the Marcus Hook refinery removed 15% of the operating Northeast refining capacity.”

Alternative sources

It said that alternative sources could be used if Northeast refinery production remains sharply curtailed. The US Gulf Coast could contribute significantly, especially since its refinery capacity is more sophisticated than the Northeast’s and growing, the analysis said. “The main product pipeline to the Northeast, Colonial, would be the preferable transportation option if, as expected, additional capacity were available,” it said. “Waterborne transportation via tanker or barge on Jones Act vessels is another possibility.”

More products could be imported, and rail shipments from refineries in the Midwest might begin rail shipments of products in addition to propane and ethanol, although expected volumes would be relatively small, EIA said. “More output from the remaining Northeast refineries is expected, but not enough to replace lost volumes,” it said. “Other refiners in the region may see an opportunity to expand or upgrade their own capacity in the longer term.”

EIA noted that it plans to issue a more comprehensive analysis in January. This one came in response to a Nov. 7 request by three US House Democrats for the US Department of Energy’s independent statistical and analysis service to evaluate possible supply impacts from the announced refinery sales and closures. One of them, Rep. Edward J. Markey (D-Mass.), who is ranking minority member of the Natural Resources Committee, said on Dec. 23 that EIA’s analysis “shows that these oil companies are putting profits ahead of the people living in the Northeast.”

National Petrochemical & Refiners Association Pres. Charles T. Drevna also responded to EIA’s analysis. US refiners want to continue supplying proven and reliable petroleum products to consumers, but are unable to stay in business if their costs exceed their earnings because they don’t receive, nor have they requested, government subsidies, he said on Dec. 23.

“Unfortunately, existing and proposed federal overregulation that has little or no environmental benefit—along with permit delays—has raised the cost of manufacturing fuels in America by billions of dollars and threatens further massive cost increases,” Drevna continued. “Anyone interested in the best interests of American consumers, the survival of refineries in America, and the preservation of refinery jobs should oppose such overregulation. This would be the most effective action to prevent refinery closures.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Transco seeks FERC approval for New York Bay Expansion project

07/09/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

House Oversight panel subpoenas Kerry for Keystone XL documents

07/09/2015 The US House Oversight and Government Reform Committee issued a subpoena to US Sec. of State John F. Kerry for reports, recommendations, letters, a...

MARKET WATCH: NYMEX crude oil prices drop for fifth consecutive trading session

07/09/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 8 for the fifth consecutive trading session, and analysts attri...

Ending crude export ban would help rural US areas, House panel told

07/09/2015 Rural US communities generally have benefited from the nation’s crude oil production renaissance, and potentially could be helped more if restricti...

MOL completes Ithaca Norge acquisition

07/09/2015 MOL Group, Budapest, has completed its acquisition of Ithaca Petroleum Norge from Ithaca Energy Inc. for $60 million plus possible bonuses of up to...

Courts less deferential to regulatory agencies, GMU forum told

07/08/2015 US Supreme Court decisions in the recently completed term suggest that judicial deference to federal regulatory agencies is starting to recede, spe...

AER orders Apache Canada to address integrity of pipeline system

07/08/2015 Alberta Energy Regulator has directed Apache Canada Ltd. to address the integrity of its pipeline management system because of “failure to follow p...

API releases pipeline safety recommended practice

07/08/2015 The American Petroleum Institute released a pipeline safety recommended practice that it developed with engagement from the US Pipeline and Hazardo...

MARKET WATCH: Brent oil prices climb; NYMEX oil price holds below $53/bbl

07/08/2015 US light, sweet crude oil prices settled slightly lower on the New York market July 7 to remain under $53/bbl as Brent crude oil prices gained mode...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected