Planned U.S. Petroleum Refining Industry Spending for the First Half of 2006 Exceeds $2.4 Billion

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Currently, there are 151 capital and maintenance projects in the U.S. Petroleum Refining Industry (HPI) that are scheduled to begin construction in the first half of 2006, according to Industrialinfo.com's Refinery Tracker. These 151 projects represent a total investment value (TIV) of over $2.4 billion, which is down 24 percent, or $768 million, when comparing to the same period in 2004. The decrease in spending is partly due to that the fact that a majority of the refiners commenced construction on large environmental projects in 2005.

Capital spending represents 78 percent, or $1.9 billion, of the total spending planned for the first half of 2006. Due to the high concentration of refineries, the Southwest Market Region will see just over $790 million of investment opportunities for equipment and service providers, followed by the West Coast Region with $619.5 million. One of the larger projects in the Southwest region is the addition of a diesel hydrotreating unit at privately held Gary-Williams Energy Corporation’s (Denver, Colorado) 50,000 barrels per day refinery in Oklahoma, which is operated by Wynnewood Refining Company, a wholly-owned subsidiary.

Taking at look at the West Coast, Tesoro Corporation (NYSE:TSO ) (San Antonio, Texas) plans to construct a new $175 million delayed coker and sulfur recovery complex at its Anacortes, Washington refinery. With the addition of these new units, the refinery will be able to process lower cost heavy crude oil, which is purchased at a discount compared to light sweet crudes, making the refinery more profitable.

Click on the image at right to view a chart showing the breakdown of Petroleum Refining Industry project spending by Market Region.

There are currently 44 maintenance projects valued collectively at $549 million and scheduled to begin execution during the first six months of the year. The most active company planning maintenance projects for next year is Valero Refining Company, which is set to begin major repair and overhaul activities at four refining locations. However, it is highly likely that some of the maintenance spending will be delayed as refiners continue to take advantage of high profit margins.

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