The shale boom breathed new life into East Coast refineries that were under threat of closure by their owners between 2009 and 2012. Now some of those same refineries are under threat again, this time due to poor margins as well as the high cost of compliance with environmental regulations. After enjoying three years of improved margins through access to advantaged domestic crude delivered by rail from North Dakota, five East Coast refineries are now paying international prices for imported crude again in 2016 after differentials between domestic benchmark WTI and international equivalent Brent narrowed to less than $1/bbl in the wake of the crude price crash and an end to the federal ban on most crude exports. Today we discuss PADD 1 refinery prospects.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
This blog is based on Morningstar Commodities and Energy’s recently published East Coast Refining Outlook. Contact information to request a copy of the report at the end of this blog.
East Coast Refining Fundamentals
We consider seven refineries operating in Petroleum Administration for Defense District (PADD) 1 in our East Coast analysis (Table 1). Two plants are not included because they do not produce transport fuels (i.e. gasoline, diesel or jet kerosene). These are the 11 Mb/d American Refining Group plant in Bradford, PA that produces lubricants and the 42 Mb/d asphalt plant in Paulsboro, NJ, owned by private equity investor Lindsay Goldberg and operated by Axeon Specialty Products.
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About the song
Back to Black is the second and final studio album by Amy Winehouse, released in October 2006. The album spawned five hit singles: "Rehab", "You Know I'm No Good", "Back to Black", "Tears Dry on Their Own" and "Love Is a Losing Game".
Comments
The chart suggests that the sources of product rarely fully meet demand. Is there another source of PADD I products not included in the plot?
In reply to Figure 1 by Patrick McAward
Hi
There is a trickle of gasoline coming across into PADD 1 from PADD 2 by pipeline and by barge that is not included in the chart, but the principal factor is likely to be that different gasoline blending components are included in finished motor gasoline "product supplied" (the EIA number I used) including some renewables and or oxygenates that are not counted in the supply side of the equation.
Sandy