Eye of the Trader: Economic Slowdown Forces Petroleum Refiners to Re-evaluate Operations, Turnaround and Project Spending for 2009, an Industrial Info "Navigating the Currents of Change" Audio Webcast

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Researched by Industrial Info Resources (Sugar Land, Texas)--The ongoing economic turmoil and low crude oil price are causing petroleum refiners to modify operational activity and shift priorities of maintenance turnarounds and capital expenditures. In today's "Eye of the Trader - Navigating the Currents of Change" audio webcast, Paul Copello, Industrial Info's Senior Vice President for Energy Sales, and Chris Paschall, Senior Vice President for Petroleum Refining, explore the trends affecting the global Petroleum Refining Industry going into 2009.

The current market downturn is causing refiners to change operational procedures and cut back project spending. "We are starting to see turnaround being deferred to late 2009 or beyond to 2010-11 timeframe," Paschall said. "This includes a 20% decrease in crude unit turnarounds and 5%-7% decrease in upgrading unit turnarounds." Both capital and maintenance budgets are being slashed in 2009 as companies move to preserve cash.

Crack spreads for gasoline have been in negative territory, so refiners are not concerned with the length of the turnaround of those units. Conversely, on the distillate side, crack spreads are positive, so refiners are trying to fast track turnarounds and stay online as long as possible. Crack spread is an industry term defining the profit margin a refiner can make, taking into consideration the cost of crude oil and the cost of products produced in the refining process. From an operational standpoint, gasoline units, such as fluid catalytic cracking units, are being trimmed back and some reformers are being shut down.

Worldwide, the U.S. market continues to drive capital spending to increase refining capacity. During the past three to four years, demand has caused refiners to plan major capacity increases. Some of these projects are under way. Demand has waned recently. Projects in Middle East and Asia are progressing, while some capacity increases have been canceled or scaled back.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.