Atlantic Basin Capacity Expansion Not Needed Now
•Planned capacity expansions in Atlantic Basin exceed demand growth in medium term (to 2015)
•Again seeing closures (Eagle Point – just the beginning?)
•Refinery asset value has dropped
•Heavy crude supply impacting U.S. projects
•PADD 2 upgrading projects more likely to move ahead than PADD 3 due to oil sands connections
•Europe needs more diesel production
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SDemand forecasts for Europe and the United States have been revised downward with little or no growth for refined products.  That means planned refinery expansions will only create excess capacity.

SWith low utilization and potential for more capacity from planned projects, closures may occur to try to restore profitability, as evidenced by the recent indefinite idling of Sunoco’s Eagle Point refinery in New Jersey.

SClosures are also more likely since the resale market that existed earlier will now attract few if any buyers.  There could be exceptions, particularly in areas where less competition exists due to limited demand.

SMany U.S. projects include bottoms upgrading (added coking capacity).  The prospects for these projects has dimmed with lower light-heavy price differentials, and a changed picture for heavy crude oil availability – especially in the Western Hemisphere.

SPADD 2 projects that are tied to Canadian oil sands production look more attractive than PADD 3 bottoms upgrading projects.

SMany European projects include added hydrocracking capacity to make more distillate, but in some cases, they also include crude distillation capacity expansion – which is not needed now.