EIA Sees Slight Uptick in U.S. Refining Capacity

As of January 1, U.S. refining capacity had increased slightly for the first time since the COVID-19 pandemic, reversing two years of decline, according to the U.S. Energy Information Administration (EIA), which cited its annual Refinery Capacity Report.

Operable atmospheric crude oil distillation capacity totaled 18.1 million barrels per calendar day (b/cd) at the start of this year, a 1% increase from 2022, the EIA reported on July 25. Calendar-day capacity represents the operator's estimate of the input that a distillation unit can process over a 24-hour period under usual operating conditions.

The number of operable refineries in the U.S. decreased to 129 at the beginning of 2023, down from 130 refineries at the beginning of 2022, due to the closure of a small refinery in Santa Maria, California, which had 9,500 b/cd of crude oil distillation capacity.

The EIA noted that the 2023 Refinery Capacity Report does not reflect changes in U.S. refining capacity after January 1. These include Exxon Mobil Corporation's (NYSE:XOM) (Irving, Texas) completion of a major refinery capacity addition in mid-March, which boosted the facility's total crude oil distillation capacity by 250,000 barrels per day (BBL/d) to 630,000 BBL/d. For more information, see March 17, 2023, article - ExxonMobil's Beaumont Opens New Chapter in Gulf Coast Refining.

Additional expansion projects this year include a crude oil capacity expansion at Marathon's Galveston Bay Refinery and a coker expansion project at Valero's Port Arthur Refinery. For more information on Marathon's South Texas Asset Repositioning (STAR) refinery expansion project in Galveston, see May 3, 2023, article - Marathon Petroleum Completes STAR Project, Reports Strong First-Quarter Profits.

The EIA noted that Phillips 66 (NYSE:PSX) (Houston, Texas) announced plans to stop refining petroleum at its 120,200-b/cd Rodeo Refinery in California while the facility transitions to refining biofuel, but it had not terminated its refining operations as of January 1. For related information, see June 2, 2023, article - California Leads U.S. in Alternative Fuels Projects Under Construction.

Also, LyondellBasell (NYSE:LYB) (Rotterdam, Netherlands) had previously announced that its 268,000-BBL/d refinery in Houston, Texas, would close by the end of 2023, but the company recently announced that it will delay the facility's shutdown until 2025. For more on that, see June 1, 2023, article - LyondellBasell Delays Exit from Refining Business.

Industrial Info's Hillary Stevenson, senior director, energy market intelligence, noted that between the beginning of 2020 and the lowest point in 2022, U.S. refinery operational capacity decreased about 950,000 BBL/d to just more than 17 million BBL/d. Since that low point in 2022, the industry has rebuilt about 740,000 BBL/d of capacity.

"The outlook for future U.S. capacity additions is mixed," Stevenson said. "In-plant capital projects are more likely to happen than refinery restarts or grassroots projects."

She pointed out that in-plant capital projects could expand U.S. refinery capacity by 112,500 BBL/d by 2028, according to Industrial Info's project database. Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Project Database can click here for a list of detailed project reports.

Also, the planned restart of the St. Croix refinery in the U.S. Virgin Islands could bring back 180,000 BBL/d by 2025, Stevenson noted. Click here for the related project report.

Finally, grassroot projects plan to add 361,600 BBL/d of new capacity but are assessed by Industrial Info as having a low probability of moving forward as planned, with no final investment decisions achieved yet, she said.