U.S. Refineries Achieve Record Crude Distillation Capacity in 2018

U.S. Energy Information Administation, June 28, 2019

From January 1, 2018, to January 1, 2019, U.S. operable atmospheric crude oil distillation capacity increased 1.1%, reaching a record high of 18.8 million barrels per calendar day (b/cd), according to the U.S. Energy Information Administration’s (EIA) annual Refinery Capacity Report (Figure 1). The previous peak for the first day of the year came in 1981, when operable capacity reached 18.6 million b/cd, just slightly higher than on January 1, 2018. U.S. operable crude oil distillation unit (CDU) capacity has increased slightly in six of the past seven years. Operable capacity includes both idle and operating capacity.

U.S. Atmospheric Crude Distillation Capacity 2019

EIA measures refinery capacity in two ways: barrels per calendar day and barrels per stream day (b/sd). Calendar-day capacity is the operator’s estimate of the input that a distillation unit can process in a 24-hour period under usual operating conditions, recognizing the effects of both planned and unplanned maintenance. Stream-day capacity, on the other hand, reflects the maximum number of barrels of input that a distillation facility can process within a 24-hour period when running at full capacity under optimal crude oil and product slate conditions with no allowance for downtime. Stream-day capacity is typically about 6% higher than calendar-day capacity.

The number of operable U.S. refineries remained at 135 from January 1, 2018, to January 1, 2019, because 2 refineries combined operations and another split its reporting between 2 plants. Tesoro Refining and Marketing’s Carson and Wilmington plants (now owned by Marathon) combined operations, as did the Par Hawaii and Island Energy Services plants in Kapolei, Hawaii. Since the beginning of 2019, Targa Resources started up a new condensate splitter in Channelview, Texas, that began operating during the first quarter of this year. Suncor Energy split its reporting between the East and West plants in Commerce City, Colorado.

Marathon Petroleum Corporation acquired Andeavor and its 10 U.S. refineries in 2018, making it the largest refiner in the United States, with an operable CDU capacity of a little more than 3 million b/cd. Marathon now has about 800 thousand b/cd more CDU capacity than Valero Energy Corporation, which has a CDU capacity of 2.2 million b/cd and had previously been the largest refiner in the United States based on operable CDU capacity.

Gross inputs to U.S. petroleum refineries—also referred to as refinery runs—and crude oil production both established new volumetric records in 2018 (Figure 2). U.S. crude oil production, which averaged 11.0 million barrels per day (b/d) in 2018, has more than doubled since 2009. Crude oil inputs to U.S. refineries averaged 17.0 million b/d in 2018, compared with 14.3 million b/d in 2009. During that period, operable refinery CDU capacity increased 1.2 million b/cd, and utilization rose from 83% in 2009 to 93% in 2018, resulting in a 2.6 million b/d increase in crude oil inputs. During the same period, U.S. crude oil imports decreased by 1.3 million b/d and U.S. crude oil exports increased by 2.0 million b/d.

U.S. Crude Oil Production, Net Imports, and Crude Oil Inputs to Refineries 2018

The quality of crude oil inputs to U.S. refineries has also evolved during the past decade. As the United States has increased crude oil production, the average density of U.S. crude oil has become lighter. Because U.S. refineries imported less of their crude oil inputs as they replaced imports with domestically produced crude oil, the average API gravity—a measure of a crude oil’s density where higher numbers mean lower density—of crude oil inputs to refineries increased. For example, the U.S. Gulf Coast, which is home to about half of U.S. refining capacity, imported only 31% of its crude oil inputs to refineries during the first quarter of 2019, down from 68% in 2009 (Figure 3). During this time, the weighted average API of crude oil inputs into Gulf Coast refineries increased from 29.6 degrees for the full year in 2009 to 33.4 degrees in the first quarter of 2019.

Gulf Coast Refinery Crude Oil Sources and Gross Inputs

U.S. refineries have adapted to this changing crude oil slate by slightly increasing their yields of petroleum products that are derived from lighter crude oil, such as jet fuel, gasoline, and distillate (Figure 4). They have also increased their use of secondary refining units, which are downstream refinery units that process the products coming from the atmospheric crude oil distillation unit into lighter petroleum products. The lighter products often have higher refining margins, a measure that represents the difference between the prices of the petroleum products and the crude oil prices.

U.S. Gulf Coast Product Yields and Weighted Average API of Crude Oil Inputs

EIA’s 2019 Refinery Capacity Report indicates that secondary refining capacity—including but not limited to thermal cracking (coking), catalytic hydrocracking, and hydrotreating and desulfurization—increased by about 8% from 2009 to 2019. These downstream capacity increases enable refineries to produce larger amounts of lighter petroleum products and to meet the required specifications for these products.

The Refinery Capacity Report also includes information on capacity expansions planned for the rest of the year. Based on information reported to EIA in the most recent update, U.S. refining capacity will not expand significantly during 2019. Further investment in U.S. refinery expansion projects depend on expectations about crude oil and petroleum product price spreads, the characteristics of the crude oils being produced, product specifications, and the relative economic advantage of the U.S. refining fleet compared with refineries in the rest of the world.

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell nearly 2 cents from the previous week to $2.65 per gallon on June 24, 18 cents lower than the same time last year. The West Coast price fell over 6 cents to $3.39 per gallon, the Rocky Mountain price fell over 4 cents to $2.87 per gallon, the Gulf Coast price fell nearly 4 cents to $2.30 per gallon, and the East Coast price fell nearly 2 cents to $2.54 per gallon. The Midwest price increased over 2 cents to $2.56 per gallon.

The U.S. average diesel fuel price fell nearly 3 cents to $3.04 per gallon on June 24, 17 cents lower than a year ago. The Rocky Mountain price fell over 4 cents to $3.03 per gallon, the West Coast price fell nearly 4 cents to $3.63 per gallon, the Midwest price fell over 3 cents to $2.93 per gallon, and the Gulf Coast and East Coast prices each fell 2 cents to $2.80 per gallon and $3.08 per gallon, respectively.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 1.4 million barrels last week to 75.9 million barrels as of June 21, 2019, 9.5 million barrels (14.3%) greater than the five-year (2014-2018) average inventory levels for this same time of year. Midwest and Gulf Coast inventories increased by 1.5 million barrels and 0.6 million barrels, respectively, while Rocky Mountain/West Coast inventories increased slightly, remaining virtually unchanged. East Coast inventories decreased by 0.7 million barrels. Propylene non-fuel-use inventories represented 6.5% of total propane/propylene inventories.

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