2014 U.S. refinery update: Capacity edges up, ownership shifts

The U.S. Energy Information Administration (EIA) surveys U.S. refinery ownership and capacity annually at the start of each year. As of January 1, 2014, according to the EIA Refinery Capacity Report released today (June 25), there were 139 operating refineries and three idle refineries with total atmospheric crude oil distillation capacity of 17.9 million barrels per calendar day¹(bbl/cd), a 101,000-bbl/cd increase in capacity from January 1, 2013.
In 2013, four refineries changed ownership, continuing the trend of a handful of sales each year. Nustar Refining sold its San Antonio, Texas, refinery (16,100 bbl/cd) to Calumet Specialty Products Partners. BP sold two refineries in 2013, one in Texas City, Texas (451,000 bbl/cd), to Marathon Petroleum Corporation, and a second in Carson, California (251,000 bbl/cd), to Tesoro Corporation. Tesoro sold its Ewa Beach (Kapolei), Hawaii, refinery (93,500 bbl/cd) to Par Petroleum Corp. Tesoro is now the 7th largest refiner in the United States, as measured by ACDU capacity and BP is now 10th. BP now has less than half of the refining capacity that it had after it merged with Amoco in 1998.

Valero Energy Corporation remains the largest U.S. refiner, with total ACDU capacity of more than 1.9 million bbl/cd. Exxon Mobil Corporation is second at almost 1.9 million bbl/cd. With the purchase of the Texas City refinery from BP, Marathon Petroleum Corporation became the third-largest refiner, with a capacity of 1.7 million bbl/cd. Marathon is calling the refinery Galveston Bay to distinguish it from the much smaller Texas City refinery Marathon had already owned. Phillips 66 fell to fourth-largest and Motiva remained fifth. Combined, these five companies own 45% of total U.S. refining capacity.

With its purchase of the Carson refinery, Tesoro became the largest refiner on the West Coast. The concentration of refinery ownership in other regions is mostly unchanged from last year. PBF Energy Corp and Marathon Petroleum still lead the East Coast and Midwest in refining capacity, respectively. Valero has the most capacity in the Gulf Coast region, and Suncor has the most capacity in the Rocky Mountains.

Increased crude production in the Bakken formation in North Dakota and the Eagle Ford in South Texas has spurred the construction of two new refineries that are expected to come online by the end of 2014. Kinder Morgan plans to start up a 50,000-barrel-per-stream-day² (bbl/sd) initial phase of a condensate processing facility on the Houston Ship Channel in November, and Dakota Prairie Refining LLC expects to start operations at the 20,000-bbl/sd refinery in Dickinson, North Dakota, in December. These will be the first two new refineries built in the United States since 2008, when a 5,000-bbl/sd refinery opened in Douglas, Wyoming.

While crude distillation capacity is one of the most widely tracked indicators of refinery size, the capacity of other secondary unitsis also important. Expansion of secondary-unit capacity can follow a different pattern over time, as refiners invest in the specific types of capacity needed to support changing crude qualities, shifting product demand and more-restrictive product qualities. As of January 1, 2014, vacuum distillation, thermal cracking, catalytic hydrocracking, catalytic reforming, hydrotreating, and deasphalting capacity all had increased slightly, while fluid catalytic cracking capacity decreased.

Note:  An idle refinery is one at which the atmospheric crude oil distillation unit (ACDU) is either not operating and not under active repair, but could be placed in operation within 30 days, or not operating and under active repair that can be completed within 90 days. A refinery may be idle for any number of reasons including routine maintenance, unplanned maintenance, or shut down because of market conditions.

Gasoline and diesel fuel prices increase
The U.S. average retail price of regular gasoline increased by two cents to $3.70 per gallon as of June 23, 2014, 13 cents higher than last year at this time. Prices increased in all regions of the country except in the Midwest where the price decreased two cents to $3.69 per gallon. The Rocky Mountain and Gulf Coast prices increased the most, up 8 cents to $3.61 per gallon and up 7 cents to $3.49 per gallon, respectively. The East Coast price increased by three cents to $3.67 per gallon while the West Coast price gained a penny to $4.01 per gallon.

The national average diesel fuel price increased four cents to $3.92 per gallon, 8 cents higher than last year at this time. Prices increased in all regions of the nation. The West Coast price increased the most, by 6 cents, to $4.05 per gallon. The Midwest and Gulf Coast prices each increased four cents, to $3.88 per gallon and $3.81 per gallon, respectively. The East Coast and Rocky Mountain prices both increased two cents, to $3.99 per gallon and $3.91 per gallon, respectively.

Propane inventories continue to rise
U.S. propane stocks increased by 2.4 million barrels last week to 53.7 million barrels as of June 20, 2014, 1.2 million barrels (2.1%) lower than a year ago. Gulf Coast inventories increased by 1.5 million barrels and Midwest inventories increased by 0.6 million barrels. East Coast inventories increased by 0.3 million barrels and Rocky Mountain/ West Coast inventories increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 7.5% of total propane inventories.

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¹ Barrels per calendar day – is the amount of input that the distillation unit can process under usual operating conditions, taking into account both planned and unplanned maintenance.
² Barrels per stream day – is the design capacity of a refinery, and represents the maximum number of barrels of inputs that the distillation unit(s) can process in a 24-hour period under optimal conditions.