|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 Sunocos Eagle Point refinery in
|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
|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.