Refineries "take units down because of unforeseen problems" : LUSENET : TB2K spinoff uncensored : One Thread


NEW YORK, Aug 4 (Reuters) - The stress of running near full blast this summer and last is starting to take its toll on U.S. oil refineries with outages breaking out on essential units, analysts said on Friday.

Refineries have been running over 99 percent of capacity since the end of June as they strain to keep up with strong summer demand, according to the Energy Information Administration, the Department of Energy's statistics arm.

A rash of snags surfacing this week on refinery row in the U.S. Gulf suggest the strain is taking its toll - and have helped push U.S crude oil prices back up to $30 a barrel.

"I think the high run rates of refineries combined with fortunate circumstances last summer when their weren't any serious disruptions, is catching up to the industry now," said Tom Knight, manager of refined products at

Refiners have been bowling along at high production rates to take advantage of soaring margins, which hit post-Gulf War highs in mid-June. Pump prices spiked to record levels as U.S. plants struggled to supply a new grade of green summer gasoline.

They ran just as hard last year, and refineries are now starting to pay the price. BP Amoco 's huge Texas City plant, Shell and Petroleos Mexicanos' Deer Park, Texas refinery and Motiva's plant in Convent, La are all having to take units down because of unforeseen problems.

These stoppages comes on top of a glitch last week at Tosco Inc.'s enormous 135,000 bpd cat cracker in Bayway, New Jersey which helped push New York Mercantile Exchange gasoline futures up more than five cents a gallon.

With U.S inventories of refined product running well below last year, the effect of each snag is magnified.

"A rash of problems in late July and the first half of August is almost regular seasonal event," said Tim Evans senior analyst with Thomson Global Markets.

"But last year we were less sensitive to the problems we did have, because we were still coming off a big glut from 1998," he said. "It wasn't quite as critical as it is this summer."

-((Timothy Gardner, New York Energy Desk, +1 212 859-1632; fax +1 212 859-1629; email:

(C) Reuters Limited 2000.

-- (here_we@go.again), August 05, 2000

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