Refiners delay maintenance as U.S. fears tight supplies : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Story Filed: Wednesday, February 16, 2000 11:32 AM EST

BOSTON (Reuters) - U.S. Energy Secretary Bill Richardson said on Wednesday that while public attention has so far focused on high heating oil prices, gasoline prices could take a similar leap this summer, just as driving season peaks.

``If oil prices stay this high in the spring, summer gasoline prices will mirror this winter's heating oil prices,'' Richardson told a public meeting on high oil prices.

However, he announced several steps to ease oil prices.

Large independent U.S. oil refiners Tosco Corp. (TOS.N) and Coastal Corp. (CGP.N) have agreed to delay routine maintenance at their oil refineries to keep production as high as possible, he said.

Last week Richardson urged all U.S. refiners to postpone routine maintenance and repairs during the next few weeks until the heating oil crisis in the northeastern United States has subsided. He did not say whether any other U.S. refineries had agreed to his request.

The U.S. energy chief also plans to speak with major U.S. oil suppliers Saudi Arabia, Kuwait, Mexico and Veneuzela about the current tight supplies and high prices. Richardson said he has already held telephone conversations with the oil ministers of Saudi Arabia and Venezuela.

``We are reminding our energy trading partners that our partnership goes both ways,'' he said. The administration also told the oil-producing nations that sustained high prices could hurt the global economy and would be ``self defeating for everyone'' in the long run.

Tosco said earlier this week that it has a limited turnaround slate this spring. On Tuesday, a Tosco official told Reuters at a New York energy conference that the company plans no more major maintenance at its refineries this year, beyond a month long maintenance at its 95,000 barrels per day (bpd) Ferndale, Washington, refinery that began in late January.

When asked what maintenance Richardson was talking about, Coastal Corp. spokesman Greg Clock said it was not company policy to comment on maintenance at refineries.

Tosco has the capacity to refine 950,000 bpd, while Coastal has a refining capacity of 465,000 bpd.

-- Homer Beanfang (, February 16, 2000


I don't know how to quantify this, but my guess is that postponing routine maintenance by a few weeks (which is what Richardson is asking for) is not going to increase the risk of accidents very much. On the other hand, it's hard for me to believe that it's going to have much of an impact on the availability of oil/gas. After all, we're now being told that OPEC began cutting back production by roughtly 7.5% starting in March 19999. In metaphorical terms, it seems like the oil industry is like a big ocean liner: it can't turn on a dime just because some high level government official jawbones a couple of refineries into postponing maintenance for a few weeks.


-- Ed Yourdon (, February 16, 2000.

In urging refiners to postpone maintenance and repairs, Richardson seems to be hoping that these postponements will not start taking their toll until total refinery capacity returns to normal levels. If he's wrong, that gamble may end up aggravating future supply problems.

Homer, thanks for posting this item.

-- David L (, February 16, 2000.

The question that I have in response to the apparent agreement to postpone maintenance at the two refineries is simply this: What is the source of the emerging shortage of petroleum products that are clearly being indicated by the marketplace's early warning signs of higher prices? Is it simply higher demand?

If the shortage is caused by a reduction in the volume of crude coming from producers such as OPEC, then how is it that the postponement of needed maintenance at the refining stage of production will help relieve this shortfall?

On the other hand, if it is a shortage in refinery capability, then what is the purpose for the rhetorical criticisms surrounding the production limits apparently being purposefully(???!!) set by the producers of crude such as OPEC?

Please help me replace my ignorance with wisdom for I am unable to understand......

With respect,

-- Dave Walden (, February 16, 2000.

Excerpts from two OPIS Alerts from today...

2000-02-16 15:40:13 EST


2/16 (3:30 P.M. EST) - Energy futures endured a volatile session today, but crude oil and refined products weathered wave after wave of selling pressure in the afternoon. When the dust cleared, refined products posted a significant gain and crude oil showed little change on the day.

Concern is clearly focusing on gasoline, where stocks are about 15% lower than last year, with most of the deficit in east of the Rockies markets. [snip] A very strong Gulf Coast cash market was witnessed throughout the day, with concerns that prompt gasoline might move higher in the wake of recent refinery problems.


Crude oil appears rangebound and may trade off of headlines for the next week or so. Statements coming from OPEC oil representatives have been contradictory in recent days, and that is keeping March WTI right around $30 bbl.

- Tom Kloza,

2000-02-16 09:11:59 EST


2/15 -- Gasoline futures are getting a solid boost in overnight ACCESS trading thanks to some very bullish API gasoline data. The agency is reporting that total U.S. gasoline inventories dipped by 3.7-mil bbls, a number far greater than many industry experts were anticipating. Regionally, there were million-bbl plus draws in PAD's 1,3 and 5; on the West Coast, gasoline stocks dropped below 27-mil bbls, a number that is considered "crucial" for adequate supply.


My Comment: The end of the Alert is a chart that I have no hope of formatting properly. Among the information are the following API figures for nationwide Crude Oil/Refinery Operations: 84.4% for last week, 86.6% for this week, and 94.4% as of (this week?) last year. I do not think the 86.6% includes the Gulf Coast Port Arthur or Baton Rouge refineries that just went out of service. So we appear to be in a gasoline shortfall without the compensatory refinery capacity to build the inventory back up.

-- Brooks (, February 16, 2000.

Delay Maintenance on the already neglected Refineries?I am sure they are not maintained any better than Airliners.You can see that by all the Reports coming in about the Refineries.Will that Delay cause Fuel Contamination,like Australia suffered,where all Piston Engine Air Traffic was grounded?How could Richardson be talked into making a Statement like that.The CEOs of the Oil Companies found a Dummy,that they now can blame for all the Mismanagement,Manipulation and resulting Problems,that WILL arise.Where is our Justice Dept.and Law Enforcement to keep an Eye on these Activeties???Oh,I forgot,they are probably busy writing Tickets for Jay Walking and planning another WACO.

-- Croever (, February 16, 2000.

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