Pandemic-Cut Production Yields Fewer Breakdowns for U.S. Refineries

U.S. refineries have sustained fewer mechanical outages as production has fallen because of the coronavirus pandemic in 2020, according to data from energy intelligence service Industrial Info Resources.  Average unplanned mechanical maintenance for crude units resulted in 95,000 barrels of capacity offline in April, May and June, compared with 254,000 barrels offline on average in the prior-year period.

Because of reduced travel caused by the COVID-19 pandemic, U.S. refinery utilization fell from record highs to 68% of 19 million barrels per day in April. Utilization rose to 78.1% by the first week of July.

“Running units at higher capacity for many years requires more maintenance,” said Sandy Fielden, energy analyst at financial services firm Morningstar.

Prior to the pandemic, U.S. energy and chemical production was at an all-time high, and increasingly complex refineries had been running full-tilt, sometimes eschewing planned downtime to try to boost profits.

John Auers, executive vice president with Dallas-based Turner, Mason, said most U.S. refiners operate their plants reliably and safely and brought production down quickly when demand took a dive in March.

“More than anything you can say it shows how good refiners were reacting to this crisis,” Auers said.

Unexpected refining outages have soared in recent years, surpassing 2,000 incidents in 2019, quadruple 2015 levels.

This year, some refiners took advantage of the unexpected downtime to perform routine maintenance. Others have delayed projects because of concerns the coronavirus could spread among refinery workers if the maintenance goes ahead.

But the reduced production rates may be affecting refiners’ financial ability to make repairs.

“Refiners are piling overhead onto fewer barrels of oil refined, restricting cash flow that could be used for maintenance,” Fielden said.

(Reporting by Laura Sanicola and Erwin Seba; Editing by Leslie Adler)