US Gulf Coast Refineries Maintain High Utilization Rates Despite Extreme Heat
Refineries along the US Gulf coast have managed to maintain their usual high utilization rates this summer, even in the face of extreme heat that can pose challenges to industrial operations. Despite prolonged periods of scorching temperatures, Gulf coast refinery utilization rates have remained above the five-year average. In the week ending August 11, utilization climbed to 94.6%, consistent with typical levels for the summer season, while crude throughputs were slightly lower at 8.96 million barrels per day (b/d) compared to the same period last year.
Despite the heatwave currently gripping the Houston, Texas area, with temperatures exceeding 100°F for three consecutive weeks and below-average precipitation, Gulf coast refineries have fared well. The National Weather Service (NWS) predicts that temperatures throughout Texas and the Gulf coast will remain above average in the coming weeks.
This summer hasn’t been without its challenges for operators, as utilization rates temporarily dipped from 95% to 91% in July. Additionally, there have been notable outages in the region, including flaring events and maintenance work at ExxonMobil’s refinery in Beaumont, Texas. The refinery’s coker unit experienced reduced capacity due to heat-related issues. Marathon Petroleum’s Galveston Bay refinery also faced an unplanned shutdown of its fluid catalytic cracking (FCC) unit and a malfunction in its sulphur recovery unit.
Nevertheless, overall regional production has remained strong as we head into the late summer and the peak of the hurricane season in the Atlantic basin, which poses a distinct threat to refiners.
Extreme heat can negatively impact refinery operations, reducing efficiency and output by as much as 4-5%. High temperatures can challenge even the water-based systems that refineries utilize to regulate unit temperature. Air-cooled units are similarly susceptible to temperature rises. Moreover, the heat affects the efficiency of fluid catalytic cracking (FCC) unit regenerators, compromising their ability to clean catalysts used in breaking down large hydrocarbon molecules.
Maintenance work is also affected by hot weather. Chemicals used for cleaning tanks and equipment have specific flashpoints. When ambient temperatures approach these flashpoints, scheduled maintenance may be delayed to ensure safer conditions. Maintenance work that proceeds in hot weather may take longer as crews opt for less volatile chemicals and degreasers, and in some cases, only water can be used for cleaning, significantly extending the time required for cleaning procedures.
While Gulf coast refineries have successfully navigated their operations through record-breaking heat, the intense peak of the hurricane season poses potential disruptions. Major storms can result in the shutdown of offshore Gulf of Mexico crude production, which serves as a crucial source of crude for Gulf coast refineries. An above-average hurricane season is predicted, primarily due to record-warm Atlantic sea surface temperatures. The National Oceanographic and Atmospheric Administration (NOAA) anticipates 14-21 named storms, of which 6-11 may develop into hurricanes, with 2-5 potentially becoming major hurricanes.
Significant storms can cause power outages, posing a threat to Gulf refineries and petrochemical plants. In its analysis of chemical releases during hurricanes, the US Chemical Safety Board recommended stricter standards for the electric grid to mitigate accidents caused by hurricanes and unpredictable extreme weather.
Notably, power grids can already be stressed without the influence of storms, potentially leading to power loss at refineries that lack on-site generation. The Electric Reliability Council of Texas (ERCOT), responsible for operating the power grid in most of the state, has set several all-time peak demand records this summer. Although operations have remained stable thus far, ERCOT issued a voluntary conservation notice, cautioning that the margin between demand and available generation could become dangerously narrow during specific hours.
In conclusion, Gulf coast refineries have maintained high utilization rates despite extreme heat this summer, surpassing the five-year average. Although challenges such as temporary dips in utilization rates and outages have occurred, overall regional production has remained robust. However, the looming peak of the hurricane season poses potential disruptions, and power outages remain a concern. Refineries will need to stay vigilant and prepared as they navigate these challenges in the coming weeks.
