Oil Refining Capacity May Not Fully Recover From Pandemic
EghtesadOnline: Millions of barrels of oil refinery capacity might permanently close across the global energy complex after being lost when demand crashed during the coronavirus pandemic, US refiners said on Friday.
Executives at Phillips 66 and PBF Energy, told investors some refining capacity currently offline could remain that way depending on the future course of the pandemic, while new capacity additions are likely to be delayed, Reuters reported.
“Even in a good environment, these projects tend to get delayed, but in the environment we’re in today they’re likely to get delayed even more significantly,” said Jeffrey Dietert, vice president of investor relations at Phillips 66.
Depressed demand for jet fuel could also cap refinery utilization rates across the industry, according to executives at PBF Energy, the fourth-largest US oil refiner by capacity.
Demand for gasoline and distillates has recovered by 80% to 90% since the worst of the pandemic, but jet fuel demand has only rebounded 30%, according to the Energy Information Administration. Because refineries cannot make products like diesel without producing jet fuel as well, they will restrain output, PBF Chief Executive Thomas Nimbley said.
Other independent US refiners are running near 80% utilization, but PBF is still operating below that and will continue to do so until it sees demand return in key markets, Nimbley said.