Analysis & Projections

Refinery Outages: First-Half 2016

Release date: March 23, 2016


This report examines U.S. refinery outages planned for the first half of 2016 and the implications for available refinery production capacity, petroleum product markets, and the supply of gasoline, diesel fuel, and jet fuel. Dissemination of such analyses can be beneficial to market participants who may otherwise be unable to access such information.

Planned refinery maintenance during the first half of 2016 is not expected to adversely affect the supply of gasoline, jet fuel, and distillate fuel. The effect of refinery outages on product supplies depends on many factors, including petroleum product demand, the availability of product supplies from available refinery capacity, inventories, imports and redirected exports, as well as actual levels of both planned and unplanned refinery outages. Barring unusually high unplanned outages, planned outages that extend beyond the planned period, or higher-than-expected demand, the supply of gasoline, jet fuel, and distillate fuel should be adequate in all regions during the first half of 2016.

As in previous issues, this edition of the report considers the supply of petroleum products on regional (both PADD and sub-PADD) levels, rather than at a national level. National balances have very limited meaning for the adequacy of supply because pipeline infrastructure, geography, and marine shipping regulations constrain the amount of product that can flow among the different regions of the United States.

PADD 1 planned maintenance is very light for atmospheric crude distillate, fluidized catalytic cracking, and reforming capacity in the first half of 2016. The planned outages will result in estimated production loss in gasoline of 31,000 b/d and 27,000 b/d in March and April, respectively, and production loss in distillate fuel of 12,000 b/d and 14,000 b/d in March and April, respectively. Production losses in other months during the first half of 2016 are negligible. The total estimated production loss induced by the expected outages accounts for only 2.9% of existing gasoline inventory, 1.0% of jet fuel inventory, and 1.2% of distillate inventory. The production loss in PADD 1 could be covered by existing product inventory.

Planned maintenance in PADD 2 is concentrated from March to May, with outage rates of crude distillation and reforming capacities close to the 10-year maximum level. The high planned outages of reforming capacity could cause tightness for octane. Outage rates of hydrocracking capacity will be higher than the 10-year maximum in May and June. Planned maintenance of fluidized catalyst cracking capacity will be above the 10-year maximum in February, a low-gasoline-demand month, and remain near the 10-year average between March and June. The outages will result in moderate production loss of petroleum products from February to June. The highest losses occurred in February, consisting of 132,000 b/d in gasoline, 53,000 b/d in jet fuel, and 60,000 b/d in distillate fuel. The total estimated production losses in gasoline, jet fuel, and distillate fuel account for 29%, 94%, and 25% of existing inventories as of January 8, which indicate that current inventories must be supplemented by supplies from other regions, such as the Gulf Coast, to offset lost production from the planned outages.

Planned maintenance in PADD 3 of reforming, hydrocracking, and coking units is intermittently above or close to the 10-year maximum, while planned maintenance for other units is near or below the 10-year average. The outages will result in moderate production loss in petroleum products. From February to April, the expected average losses are 303,000 b/d in gasoline, 28,000 b/d in jet fuel, and 113,000 b/d in distillate fuel. Gulf Coast inventories are all near or above the 10-year maximum at the beginning of 2016. The total estimated production loss as a result of the planned outages accounts for 33% of existing gasoline inventory, 18% of existing jet fuel inventory, and 21% of existing distillate inventory. As a result, there may be a need to divert exports from the U.S. Gulf Coast to domestic markets to offset lost production from the planned outages.

Planned outages in PADD 4 are moderate and concentrated in the period from February to April. Total estimated production losses from planned outages account for 34% of gasoline inventory, 71% of jet fuel inventory, and 35% of distillate inventory. The inventory levels for those products were all close to the 10-year maximum as of late January, however, continued supply from other regions will be required to offset lost production from the planned outages.

In PADD 5, planned outages between February and June will be higher than the 10-year average in coking capacities, and generally near or below the 10-year average in crude distillation, fluidized catalytic cracking, reforming, and hydrocracking capacities. Because a large share of FCC capacity remains offline from February to June from a previous unplanned outage, the total estimated production loss is concentrated in gasoline. From February through June, average production loss of gasoline is 131,000 b/d, and the average losses in jet fuel and distillate fuel are 27,000 b/d and 20,000 b/d, respectively. The total estimated reduction of petroleum products induced by the outages accounts for 66% of the existing gasoline inventory, 47% of jet fuel inventory, and 20% of distillate fuel inventory. Therefore, continued imports of gasoline and jet fuel into the West Coast will be required to provide adequate supplies.


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