Refineries may take a week to run safely
Fuel makers on the U.S. Gulf Coast may take a week or longer to get their frozen oil refineries running safely, even if at reduced rates, and that could mean higher gasoline and diesel prices at the pump.
The deep freeze and power outages roiling energy markets affected more than 20 oil refineries in Texas, Louisiana and Oklahoma. Crude-processing capacity fell by about 5.5 million barrels a day, according to Amrita Sen, chief oil analyst for consultant Energy Aspects Ltd.
When blackouts that left millions of homes in the dark end and frozen roadways thaw — which could happen as soon as this weekend — drivers can take to the road again. But refineries are left with burst pipes, leaks, damaged equipment and, in some cases, petroleum fluids that hardened into a sort of wax because the flow stopped. A return to full rates could be weeks away.
“It’s going to be a difficult restart for refiners,” said Andy Lipow, president of energy researcher Lipow Oil Associates in Houston. “They are not going to restart until power is restored and they get the go-ahead from the utilities. My guess is the earliest restarts would even begin is this coming weekend.”
As a result of the refinery shortages, gasoline futures in New York have peaked this week near $1.85 a gallon for the highest price since July 2019. At the pump, average prices for the motor fuel reached $2.575 a gallon, the highest since January 2020, according to data from auto club AAA.
Restarting a refinery isn’t like flipping a light switch when the power comes back on. In addition to fixing any damage, getting back online involves slowly heating up units, testing all the way, then slowly ramping up so they are
running fluid again. And testing and retesting the output until it meets specifications.
If a refinery didn’t shut major process equipment like gasoline-making units known as catalytic crackers before a power loss, there will be so-called dead legs, pockets of hydrocarbon and steam that freeze and can burst pipes and cause leaks. An abrupt shutdown could cause any fluids in piping to harden and take days or weeks to remove.
Even in the case of a controlled shutdowns ahead of a power loss, plunging temperatures can damage equipment. Repairs are ongoing at multiple refineries including Motiva Enterprises LLC’s Port Arthur plant, the largest refinery in the U.S. Workers remain on-site to check equipment and are repairing pipes damaged in the frigid temperatures, people familiar with operations have said.
LyondellBasell Industries NV’s Houston refinery is working to fix leaks as it waits for nitrogen to be restored from provider Praxair International Inc. and permission from the Electric Reliability Council of Texas to restart its big refinery motors that run off electricity, a person familiar with operations said. LyondellBasell spokeswoman Kimberly Windon said the company’s Gulf Coast sites experienced operational upsets due to a supplier experiencing a temporary power loss.