How Long Will the Major Refineries be Closed?

By: Mike Dombroski / February 19, 2021

After the historically low temperatures across the south this week, it may take weeks for some of the largest refineries in the country to get back up to full production.

galveston bay

The tumultuous cold spell is anticipated to end this weekend, but oil wells and refineries are shut in due to freezing pipes, lack of power, lack of water, and logistical constraints caused by the cold temperatures and freezing participation. Around 4 million barrels per day of oil production ceased and refining capacity dropped by 5.5 million barrels per day. Thankfully, there was no significant impact on the regional pipelines which ship about a third of the Northeast’s refined product demand.

However, these shutdowns may impact the refined product supplies for weeks if not months. Bloomberg reports that 4 major Texas refineries expect to be down for weeks: Marathon’s 585,000 bpd Galveston Bay, Exxon’s 580,500 bpd Baytown, Exxon’s 369,000 bpd Beaumont and Total’s 225,500 bpd Port Arthur facility. These shutdowns will certainly impact the refinery turnaround season which typically begins in March as refineries switch to producing more summer-grade gasoline and less distillate and heating oil products. Therefore, we could be on track for higher gasoline prices this summer if WTI crude oil prices remain where they are.

As mentioned in our blog yesterday, WTI prices are trading in the $60/barrel area but could be tested to the downside after Saudi Arabia mentioned this week it could increase oil production in the next few months. Therefore, it shall be interesting as the market grapples with tightening refined products over the coming weeks and potentially months with the downed refineries vs. presumed increased oil production by OPEC+ lead by the Saudi’s. 

Categories: oil/gas infrastructure, refinery

Mike Dombroski

Written by

Mike Dombroski

I enjoy helping our customers understand the commodity markets and pricing solutions we can offer to best fit their business. My supply and trading experience in gasoline and distillate products allow me to provide a comprehensive view of our industry to make our customers feel comfortable with their fuel-related decisions.

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