Petroleum Refiners Brace for Wave of Fall Maintenance Turnarounds
The fall of 2022 is set to be the biggest season for maintenance spending in the U.S. and Canadian Petroleum Refining Industry since 2019, with related spending expected to be 80% higher. Hillary Stevenson, an oil market expert and correspondent for IIR Energy, told attendees at Industrial Info's U.S. & Canada Industrial Market Outlook event last month that refiners are determined to maximize profits by producing high-margin gasoline in the short term. Industrial Info is tracking about 550 offline events planned at refineries across the U.S. and Canada for 2022, including 206 from September through November.
Following 2020's steep drop in demand, which was brought about by the COVID-19 pandemic and a stronger-but-uncertain atmosphere the following year, 2022 has seen a strong demand for refined products. Refiners who delayed maintenance projects in 2020 and 2021 are now reviving turnarounds that had been put on hold.
"Over the past few years, refiners have been dealt a rough hand," Stevenson said. "Obviously, the situation between Russia and Ukraine has put refineries back in the forefront. Obviously, high gasoline and high diesel prices are making margins a lot better, but we're short on capacity." For related information, see May 24, 2022, article -- Diesel Prices Are the Latest Economic Headwind, and May 24, 2022, article - Mid-Year Outlook: Refiners Prep for Heavy Demand, Eye Renewable Diesel.
The 550 offline events planned for all of 2022 amount to 231 projects in Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Project Database, worth nearly $4 billion. The 206 offline events for the fall season amount to nearly half of that total: 109 projects worth $1.87 billion. Subscribers to Industrial Info's GMI Database can click here for a full list of reports for 2022's maintenance projects, and click here for a list of only those with fall kickoffs.
Few industry observers would be surprised to learn the U.S. Southwest region--home to the always-busy Gulf Coast refining market--accounts for the lion's share of the investment. Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio) is by far the biggest spender, with $455 million spread across six projects, including a series of upgrades to its "Cat Max" fluid catalytic cracking unit (FCCU) at its refinery in Garyville, Louisiana. The upgrades are expected to increase gasoline and propylene yields while improving efficiency. Subscribers can learn more in Industrial Info's project report.
"Obviously, we have a lot of maintenance projects scheduled for the U.S. Gulf Coast," Stevenson said in her presentation. "That's where a lot of the refineries are, and [full-year 2022 is expected to see] a 20% increase over the number of projects in 2021."
This fall, Marathon expects to kick off maintenance on three other units at the Garyville refinery:
- the FCCU 25 and Hydrofluoric Alkylation (HF Alky) Unit 27; see project report
- the Platformer 12 and Heavy Naphtha Desulfurizer 11 Unit; see project report
- the Gasoline Desulfurizer 55 Unit; see project report
Phillips 66's $340 million worth of fall maintenance kickoffs includes a series at subsidiary WRB Refining LP's Wood River Refinery in Roxana, Illinois, which has a capacity of 220,000 barrels per day (BBL/d). They include:
- a gasoline hydrotreater upgrade; see project report
- a gasoline desulfurizer unit turnaround; see project report
- a turnaround on hydrodesulfurizer units 1 and 2; see project report
- a DHT Kerosene Hydrotreater Unit Turnaround; see project report
- an HDU 1 Hydrodesulfurizer Unit turnaround; see project report
- an HDU 2 Hydrodesulfurizer Unit turnaround; see project report
- a Reformer Unit 3 turnaround; see project report
In a recent quarterly earnings-related conference call, Mark Lashier, the chief operating officer of Phillips 66, acknowledged some of this year's turnarounds could be pushed out to next year: "I think on total activity for , we've executed our first half plan, which for the most part has gone according to what we've planned. Second half, we continue to look at primarily catalyst-type change-out turnarounds... We pushed some of those turnarounds into next year. We've got some opportunity, I think, in the back half of the year to squeak some of those out into next spring or maybe even next fall."
BP's $195 million worth of fall maintenance kickoffs are found entirely at its Whiting Refinery in Whiting, Indiana, which has a capacity of 450,000 BBL/d. They include:
- an upgrade to the FCCU 500; see project report
- an upgrade to Pipestill 11C; see project report
- a turnaround on Pipestill 11C; see project report
- a turnaround on a sulfuric alkylation unit; see project report
- a turnaround on a gas-oil hydrotreater unit; see project report
- an upgrade to a propylene concentration unit; see project report
BP's executives expect industry refining margins to remain elevated due to ongoing supply disruptions, particularly in Russia and Europe, in the second quarter.
"The refining system in the West[ern Hemisphere] is sort of running flat out," said Bernard Looney, the chief executive officer of BP, in a recent earnings call. "The spare capacity that is in the global system is largely now in the East. BP's refineries are running pretty much flat out at the moment where they can. And we're doing everything that we can to give the market what it needs. I think gasoline stocks, jet stocks are relatively low at the moment, diesel stocks are actually globally in reasonable shape. So there is a strong environment at the moment for refining."
For even more, register today for our 2022-2023 Petroleum Refining, Alternative Fuels, & Crude Oil Global Spending Outlook webinar.