Turnaround

Production of synthetic crude oil that is processed from Alberta’s oil sands reached record highs at the end of 2020 after touching on two year lows just four months earlier. However, these highs could be undermined and sink to four-year lows for a short period of time this spring with what appears to be a heavier than usual slate of maintenance work on three of Alberta’s four upgraders, the immense processing units that produce synthetic crude oil from bitumen. In today’s blog, we take a closer look at the upgraders, the timing of maintenance, and what this might mean for synthetic crude oil production and exports.

During the first 7 months of 2015 the U.S. experienced record setting refinery crude processing and utilization rates. By the end of July crude inputs topped 17 MMb/d for the first time and nationwide refineries ran at over 96% of operable capacity - reaping the rewards of robust margins. But the party has been marred by a number of unexpected outages – the latest of which brought down a 250 Mb/d unit at BP’s Whiting, IN refinery last weekend – causing a spike in Chicago gasoline prices. Today we ponder why outages may be occurring and the upcoming impact of overdue fall maintenance.

Gulf Coast diesel crack spreads (the margin between diesel prices and Light Louisiana Sweet crude - LLS) are averaging just under $16/Bbl this year – about 75 cnts/Bbl lower than 2012 but still pretty healthy. Gulf Coast diesel exports increased by 25 percent in 2012 – mostly to meet increased demand in Latin America. By December Gulf Coast refineries were running at 95 percent capacity to meet export demand. Yet during the first 2 months of 2013 refinery utilization plummeted to 80 percent, diesel production fell and Gulf Coast diesel exports dived by 300 Mb/d. Today we describe the impact that a heavier than usual Gulf Coast refinery repair season had on product exports.