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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. refineries have reduced their operations--in some cases, to record lows--as demand for petroleum products, particularly motor gasoline, remains weak amid the COVID-19 pandemic. Consequently, numerous capital-spending projects at refineries across the country have been placed on hold or cancelled as refiners re-evaluate their long-term outlooks. Industrial Info is tracking about $3.8 billion worth of U.S. refining projects that have been eliminated or indefinitely placed on hold since the beginning of April, including more than $670 million worth in which COVID-19 was specifically named as the reason.
Click on the image at right for a graph detailing U.S. refining projects placed on hold or cancelled since the beginning of April, by plant owner.
Among the big-name facilities to cancel projects is CITGO Petroleum Corporation's (Houston, Texas) Lake Charles Refinery in Westlake, Louisiana, which axed a pair of $30 million debottlenecking projects on an SF alkylation unit that would have elevated its capacity from 23,000 to 27,500 barrels per day (BBL/d). The same facility was in the path of Hurricane Laura last week, but the company says it incurred "no major structural damage to operating equipment." Nonetheless, the 418,000-barrel-per-day (BBL/d) Lake Charles Refinery remains offline as CITGO assesses damage to the area. For more information, see Industrial Info's project reports on the Phase I and Phase II debottlenecks.
In Hawaii, Par Hawaii Refining LLC's refinery in Kapolei, which is the only refinery in the Aloha State, has pushed back a slew of capital and maintenance projects since the COVID-19 outbreak, including an estimated $22 million hydrotreater unit addition and an estimated $22 million isomerization unit addition, which were designed to have capacities of 10,000 BBL/d and 6,500 BBL/d, respectively. For more information, see Industrial Info's project reports on the hydrotreater and isomerization units.
Hawaii experienced some of the lowest COVID-19 infection rates after it became one of the first states to adopt strict lockdown measures. But civic leaders in the tourism-heavy state pushed hard to reopen businesses earlier this summer, which was followed by a ten-fold surge in coronavirus infections and hospitalizations over the past month, according to Politico. The new outbreak triggered another round of shutdown orders and other public health measures, leading Politico to refer to the state as a "cautionary tale."
Other Factors Weigh on U.S. Refineries
Pandemic aside, weak market conditions and tactical pivots among refining companies also have resulted in project cancellations and long-term delays at facilities. In the oil-rich Bakken Shale, Meridian Energy Group Incorporated (Belfield, North Dakota) cancelled a $300 million second-phase expansion of its proposed Davis Refinery in Belfield, North Dakota, after the company decided to adopt a one-phase construction plan. Instead of two phases, each with a capacity of 27,500 BBL/d, Meridian will build a single, estimated $900 million full-conversion modular crude refinery to process 49,500 BBL/d. For more information, see Industrial Info's reports on the cancelled project and the one-phase plan.
Similarly, Phillips 66 (NYSE:PSX) (Houston, Texas) is indefinitely delaying its proposed, estimated $1 billion addition of units 5 and 6 at its Sweeny Refinery in Old Ocean, Texas, which would have brought NGL production at the facility up from 247,000 BBL/d to more than 800,000 BBL/d. Although Sweeny saw record margins earlier this year and recently completed an upgrade on its fluid catalytic-cracking unit (FCCU) to boost production of higher-value petrochemical products and higher-octane gasoline, the company believes overall market conditions would not justify two new units. For more information, see Industrial Info's project report.
Jupiter Energy Group (Houston) is holding off on an estimated $670 million condensate splitter in Brownsville, Texas, near the Port of Brownsville, following its decision late last year to indefinitely suspend construction of its estimated $1.2 billion Jupiter Pipeline. The 650-mile line was designed to transport up to 1 million BBL/d of crude oil from the Crane Terminal in Crane, Texas, to the Three Rivers/Gardendale Terminal in Three Rivers, Texas, then on to the Port of Brownsville, where the splitter would have produced 85,200 BBL/d of ultra low-sulfur gasoline and 61,320 ultra low-sulfur diesel. For more information, see Industrial Info's project reports on the condensate splitter and pipeline.
None of this is to say that there's no hope for the U.S. Petroleum Refining Industry. The EIA says demand for jet fuel in the U.S. has recovered faster than in many other major aviation markets, following a steep decline in late March as lockdowns went into effect globally. Although consumption of jet fuel by U.S. commercial passenger flights was only 43% of the estimated amount consumed at the same time in 2019, that percentage is much higher than the year-over-year consumption in Europe (36%), the Middle East and North Africa (30%), the rest of Africa (31%), Asia not including China (28%) and the rest of the Americas (24%). China, however, was higher at 60%.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Click on the image at right for a graph detailing U.S. refining projects placed on hold or cancelled since the beginning of April, by plant owner.Among the big-name facilities to cancel projects is CITGO Petroleum Corporation's (Houston, Texas) Lake Charles Refinery in Westlake, Louisiana, which axed a pair of $30 million debottlenecking projects on an SF alkylation unit that would have elevated its capacity from 23,000 to 27,500 barrels per day (BBL/d). The same facility was in the path of Hurricane Laura last week, but the company says it incurred "no major structural damage to operating equipment." Nonetheless, the 418,000-barrel-per-day (BBL/d) Lake Charles Refinery remains offline as CITGO assesses damage to the area. For more information, see Industrial Info's project reports on the Phase I and Phase II debottlenecks.
In Hawaii, Par Hawaii Refining LLC's refinery in Kapolei, which is the only refinery in the Aloha State, has pushed back a slew of capital and maintenance projects since the COVID-19 outbreak, including an estimated $22 million hydrotreater unit addition and an estimated $22 million isomerization unit addition, which were designed to have capacities of 10,000 BBL/d and 6,500 BBL/d, respectively. For more information, see Industrial Info's project reports on the hydrotreater and isomerization units.
Hawaii experienced some of the lowest COVID-19 infection rates after it became one of the first states to adopt strict lockdown measures. But civic leaders in the tourism-heavy state pushed hard to reopen businesses earlier this summer, which was followed by a ten-fold surge in coronavirus infections and hospitalizations over the past month, according to Politico. The new outbreak triggered another round of shutdown orders and other public health measures, leading Politico to refer to the state as a "cautionary tale."
Other Factors Weigh on U.S. Refineries
Pandemic aside, weak market conditions and tactical pivots among refining companies also have resulted in project cancellations and long-term delays at facilities. In the oil-rich Bakken Shale, Meridian Energy Group Incorporated (Belfield, North Dakota) cancelled a $300 million second-phase expansion of its proposed Davis Refinery in Belfield, North Dakota, after the company decided to adopt a one-phase construction plan. Instead of two phases, each with a capacity of 27,500 BBL/d, Meridian will build a single, estimated $900 million full-conversion modular crude refinery to process 49,500 BBL/d. For more information, see Industrial Info's reports on the cancelled project and the one-phase plan.
Similarly, Phillips 66 (NYSE:PSX) (Houston, Texas) is indefinitely delaying its proposed, estimated $1 billion addition of units 5 and 6 at its Sweeny Refinery in Old Ocean, Texas, which would have brought NGL production at the facility up from 247,000 BBL/d to more than 800,000 BBL/d. Although Sweeny saw record margins earlier this year and recently completed an upgrade on its fluid catalytic-cracking unit (FCCU) to boost production of higher-value petrochemical products and higher-octane gasoline, the company believes overall market conditions would not justify two new units. For more information, see Industrial Info's project report.
Jupiter Energy Group (Houston) is holding off on an estimated $670 million condensate splitter in Brownsville, Texas, near the Port of Brownsville, following its decision late last year to indefinitely suspend construction of its estimated $1.2 billion Jupiter Pipeline. The 650-mile line was designed to transport up to 1 million BBL/d of crude oil from the Crane Terminal in Crane, Texas, to the Three Rivers/Gardendale Terminal in Three Rivers, Texas, then on to the Port of Brownsville, where the splitter would have produced 85,200 BBL/d of ultra low-sulfur gasoline and 61,320 ultra low-sulfur diesel. For more information, see Industrial Info's project reports on the condensate splitter and pipeline.
None of this is to say that there's no hope for the U.S. Petroleum Refining Industry. The EIA says demand for jet fuel in the U.S. has recovered faster than in many other major aviation markets, following a steep decline in late March as lockdowns went into effect globally. Although consumption of jet fuel by U.S. commercial passenger flights was only 43% of the estimated amount consumed at the same time in 2019, that percentage is much higher than the year-over-year consumption in Europe (36%), the Middle East and North Africa (30%), the rest of Africa (31%), Asia not including China (28%) and the rest of the Americas (24%). China, however, was higher at 60%.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
