Tag: shutdown

Whiting refinery maintenance, possible refinery worker strike… possible outcome? Record high gas prices!

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Bad news tonight for consumers, although I personally believe that some issues will be addresssed and corrected before disaster hits. Without wasting time, let me cover the issues.

First, we have a number of refineries reporting being completely shut down tonight, including a 245,000bpd refinery in Texas and a 108,000bpd refinery in Washington. We also have some issues closer to home here in the Midwest. BP’s massive Whiting, Indiana refinery has unexpectedly shut a unit for maintenance. BP was hopeful that the maintenance would only last a week at most, but keep in mind that the unit needs to be shut-down and restarted which means that the unit’s actual time down will be more than a week. I am hopeful that BP will be accurate and have the unit back online ASAP to avoid higher prices in the Midwest market, but with Midwest prices already high, I am somewhat fearful that Midwest spot prices may rise more than those outside our PADD.

A possible price hike may happen as soon as tomorrow. I don’t have an estimated price range due to these issues listed, but it would be no lower than $1.99 and COULD break $2/gallon.

Also on the radar here at TheGasGame.com is a POSSIBLE STRIKE that could occur at some U.S. refineries as early as Sunday at 12:01am if a contract is not met. The United Steel Workers, a union that represents 30,000 workers at half of U.S. refineries that have a capacity of roughly 17.6 million barrels per day of refining capacity, may strike if a contract is not agreed on by weekend, Reuters reports.

Talks could go "down to the wire" on Saturday says USW spokesperson Lynne Baker. While both sides obviously want a new contract in place, both sides are bracing for strike. Oil companies are putting replacement workers on stand-by. Any strike would likely shut down a large portion of refinery capacity in the U.S. and could lead to a spike in gasoline prices as production dives to record low levels. This is a risky situation and one that has the potential to lead to overnight price spikes if there is no resolution. While I am also hopeful, I realize that the odds of a large refinery shut down are very small.

BP does say they WILL SHUT DOWN four of their five refineries represented by labor unions if there is a strike or lockout. BP said it would shut the plants to continue the good working relationship it has formed with the USW in recovering from a deadly 2005 explosion at its Texas City, Texas, refinery.

If any strike does occur, it would lead a huge blow to Midwest consumers, already paying more than the national average and dealing with higher unemployment than any other area in the country. I estimate that if a strike does occur and half of U.S. refineries elect to shut down, gasoline prices could spike almost overnight to $3 or $4.

In good news for Midwest consumers, PADD two contains the most crude oil since 1998- but we still need refineries to refine it so prices drop locally!

Like I said, any strike and shutdown is quite unlikely, but that doesn’t mean we should ignore a possible outcome or not plan ahead. Keep this in mind this week, and check back here at TheGasGame.com for further updates.

For media inquiries regarding this story, please contact us at media (AT) thegasgame.com

Patrick

Trading resumes on NYMEX for gasoline and oil. Prices dive!

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EDIT: FOR LATEST UPDATES ON REFINERY DAMAGE/SHUTDOWNS, VISIT THE REFINERY STATUS PAGE

NYMEX opened today at 10:30am, a break from when the exchange usually opens in the evening for electronic/international trading.

At 2:00EDT, gasoline for October delivery was trading down 12-cents/gallon while oil fell below $100/bbl.

I am researching and making calls today for possible damage reports. So far, USMMS is reporting that two oil rigs are floating adrift in the Gulf. Let’s hope it doesn’t get too much worse.

The 12-cent loss is a welcome sign, but it may not make it to your local market. Rack prices is what determines your area’s prices. Hopefully this makes it to the Ferryburg, MI rack (where gas is pumped before it arrives in Grand Rapids stations)

Back to “winter” gasoline!

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Today marks the change back from summer gasoline to the winter blend that is much easier and less expensive to produce. Will this play a major factor in deciding whether prices go up tomorrow? It definitely could. I am looking for a hike to $2.99, but it may or may not happen, and it may or may not be higher that $2.99.

I’ll keep a look out, but as of now, some retailers could be letting gas go at a loss to get their tanks full of cheaper winter gasoline before rack prices climb due to refinery shutdowns!

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Prices coming down, but for how long?

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After noticing a few regional station making nice drops, I decided to load up last week’s Midwest PADD numbers. Finally! A jump from 45.2 million barrels to 46.3 million barrels. That should help West Michigan and the Midwest region to start dropping into the $2’s again… but for how long? Maybe just a couple weeks… until our loss in Toledo catches up with us.

Not too long- we are likely to see a jump in prices as BP prepares to completely shut its Toledo, Ohio refinery for 8 solid weeks of maintenance. This is unusual for a refinery to completely shut down while performing maintenance. BP likely plans to add equipment and update old equipment to process heavy sand oils from Canada, much like their massive Whiting, Indiana refinery.

The shutdown could push local higher prices higher- Detroit will definitely notice this as the refinery directly serves Detroit. Hopefully BP will get the maintenance done faster than scheduled.

I’ve updated the latest refinery shutdowns this morning. Visit the “Computing Gas Prices” link for that up-to-date information.

About the only good news is coming out of Tulsa, Oklahoma today as Sinclair Oil announces they are interested in spending one billion dollars to expand their refinery there, bringing the capacity from 70,000bpd to 115,000bpd. That’d be nice. We need to see more of this.

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Bad news, Grand Rapids! Autumn refinery work centered on Midwest

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From CNBC.com (and The Toledo Blade below):

Midwest oil refineries are planning a heavy load of maintenance this autumn that could keep fuel supplies in the heartland tight through the rest of the year, according to a Reuters survey released Thursday.

Other regions of the United States, however, could see a lighter-then-normal fall maintenance season after many plants completed their overhauls earlier in the year — taking some of the pressure off thin fuel stocks in the world’s biggest energy consumer.

U.S. gasoline supplies are running about 8 percent below last year’s levels due to the persistent refinery outages, with Midwest stocks 9 percent below a year ago, according to the most recent government data.

Experts said the focus of refinery maintenance in the Midwest region comes after plants in the area kept running to take advantage of sterling profit margins while other refineries continued a prolonged recovery from coastal hurricanes in 2005.

“The Midwest has hung on for so long after Katrina that there is a lot there that never went down,” said Mark Routt, an analyst with consultancy group ESAI in Massachusetts.

September is expected to be the heaviest month for Midwest refinery maintenance, with 351,000 barrels per day of the region’s 8.27 million bpd of crude distillation capacity scheduled to shut.

Supplies of gasoline and diesel in the northern tier of the Magellan Pipeline, which runs from Houston to Minnesota are expected to be extremely constrained as two of top refineries are seen going out concurrently.

Perfect.

From The Toledo Blade:

One of the metro Toledo’s two refineries is to be shut down for routine maintenance lasting about two months, starting in about three weeks, people familiar with the operation who asked not to be named said yesterday.

BP PLC is to close its suburban Toledo operation in mid-September, eliminating production of 155,000 barrels a day of regular gasoline and diesel, as well as kerosene, aviation fuel, and some other products, the people said. It supplies BP stations and others selling under different brand names.

The plant generally supplies Ohio and provides products for Detroit. Although BP officials declined to discuss the temporary closure, the planned shutdown likely means the company will buy gasoline supplies to serve the state.

It is unclear whether the work will have any affect on area vehicle fuel supplies or on gas pump prices.

Such maintenance overhaul typically takes place about every four years and often takes about eight weeks to finish.

Jeff Hazle, technical director for the National Petrochemical and Refiners Association, said he did not know specifically what BP might be doing but said such work typically involves inspecting pipes and vessels, replacing equipment, and possibly adding technology to improve performance.

Thats JUST the news I couldn’t wait to hear. 🙁

🙁

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BP!! WHAT ARE YOU DOING!?

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AHHHHHHHHH! BP WHAT ARE YOU DOING!?!

BP’s Whiting Refinery is AGAIN partially shut down/most shut down.

We’re going to see local prices SPIKE as we’ve already seen a hike to 3.25.

“BP apparently shut a crude unit at its 410,000 barrel per day
Whiting, Ind., refinery,” said Tim Evans, an analyst at Citigroup Inc.

The unit processes 250,000 barrels of crude per day, which itself is larger
than many refineries, Evans said. The shutdown created concerns among
traders that gasoline production would be hurt — sending futures
higher — and that there will be less demand for crude, sending oil
futures lower.

BP is shutting a 250,000 barrel-a-day crude unit, the largest of three at Whiting, the biggest refinery in the U.S. Midwest, a person familiar with the plant’s status said today. A restart date hasn’t been determined. A second crude unit, able to process about 75,000 barrels a day, is also out of service and may restart at the end of the summer.

The outage was the latest in a series of refinery problems that pushed U.S. refining capacity to its lowest in 19 years

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