By the OGJ Online Staff
HOUSTON, June 15 -- About 75% of the refining capacity in California could be forced to either reduce operating rates or shut down if rolling blackouts should affect the refineries' electric supply, a study by the US Energy Information Administration said.
In a report Thursday, EIA said only 25% of the state's refining capacity is protected from outages, either because of sufficient cogeneration capacity or because the refinery is in an electric utility service area that is not expected to be subject to rolling blackouts.
"The potential loss of petroleum product supply in California could be unprecedented should rotating outages occur at refineries," the report said.
For instance, up to 27% of refining capacity could be forced to shut down completely if a rolling blackout happens in their blocks, the EIA said. Refineries in the service areas of Southern California Edison Co. and also Pacific Gas & Electric Co. have been assigned blocks for rolling electric outages.
Last week, Gov. Gray Davis urged the California Public Utilities Commission to ensure electric power for refiners (OGJ Online, June 8, 2001). The PUC has issued a draft decision that would exempt the state's refineries from rotating electrical outages this summer (OGJ Online, June 14, 2001). The PUC will consider the draft June 28.
A power disruption can cost a refinery up to 2 weeks to return to full operating rates, which would affect the production and supply of gasoline, diesel, and aviation fuels.
If electricity outages were to happen frequently, a refinery might choose to remain down for extended periods rather than undergo the expense of repeated emergency shutdowns and restarts, the EIA noted.
About 40% of California's refining capacity has some cogenerating capability but not enough to keep the refinery operating at full rates. These refineries' operating rates would need to be reduced by up to 30% or else selected units shut down to continue operating during an outage.
The report was based on a mail survey conducted by the California Energy Commission in early May 2001, with a follow-up telephone survey by the EIA.
The survey covered 13 of the 24 operating California refineries. The participating refineries represent about 92% of distillation capacity and 98% of gasoline and diesel fuel production capacity in California.
Other restraints
EIA also noted that refineries are also indirectly exposed to forced processing rate reductions and even complete shutdowns from disruption of services outside the refinery.
"Services that could require a refinery to reduce operating rates if disrupted include crude oil supply, product pipelines, railroad tank car movements, cooling water supply, waste water treatment, alkylation acid supply and disposal, and hydrogen supply.
"If disruptions to these services are frequent or prolonged, a refinery could be forced to shut down," it said.
The study noted California refineries get half of their crude from waterborne deliveries and half from state production.
"Although refiners expressed concern about supply of waterborne cargoes delivered through third-party terminals, the greatest concern appears over the integrity of pipeline shipments of domestic crude oil, particularly very heavy crude oils such as from the San Joaquin valley.
"The refineries that are at high risk of complete shutdown from a rotating electricity outage also are more dependent on California crude oil. Refineries in the Bakersfield and Santa Maria region north of Los Angeles receive 100% of their crude oil supply from California oil fields."
EIA noted that pipeline deliveries generally go through several pumping stations and a power loss at any one station would significantly reduce throughput rates and possibly disrupt shipments completely.
"Perhaps more significant is that some of this California crude oil is very heavy and requires heated pipelines in order for the oil to flow. Loss of electricity and pipeline flow can cause the heavy crude oil to begin to solidify requiring clearing, which could result in an extended loss of service."
Stocks serve as a buffer against supply disruptions. EIA said refineries held crude stocks last year equal to 7 days of operation (50% of available storage capacity). At individual refineries the end-of-month crude oil stocks ranged from a low of 3.5 days (25% of capacity) to a high of 11 days (80% of capacity).
EIA also observed there is a large volume of trade in unfinished oils between refineries in California. Last year an average 150,000 b/d moved between refineries, primarily by pipeline. Refineries that face a high risk of complete shutdown in the event of a rotating electrical outage are net suppliers of unfinished oils while moderate and low risk refineries are net consumers.
The study said petroleum product pipelines in California are relatively well positioned to deal with electrical outages of short duration.
