The U.S. Energy Information Administration reported this week that as a result of several U.S. refinery closures in 2020, the nation’s refinery capacity dropped 4.5%.
In an announcement, the EIA stated the primary measure of refinery capacity fell to a total of 18.1 million barrels a day at the start of 2021.
The end-of-year 2020 total is 0.8 million barrels a day less than the 19.0 million of daily refining capacity at the start of 2020. According to the data in the EIA’s annual Refinery Capacity Report, the beginning of 2021 marks the lowest annual capacity figure to start the year since 2015. Based on information reported to the agency in its recent update, U.S. refining capacity will not expand significantly during 2021.
At the beginning of 2021, 129 refineries were either operating or idle in the United States (excluding U.S. territories), down from 135 operable refineries listed at the beginning of 2020. The additional refinery closures in the 2021 Refinery Capacity Report largely reflect the impact of responses to COVID-19 on the U.S. refining sector.
In 2019, the 335,000 b/cd Philadelphia Energy Solutions (PES) refinery in Philadelphia, Pennsylvania, experienced a major refinery incident. It has not resumed operation since the incident. The EIA listed the facility as idle in the 2020 Refinery Capacity Report because the decision to permanently close the facility was not final. As of January 1, 2021, the government considered the refinery to be permanently closed, and it is not included in the 2021 report.
In 2020, the pandemic contributed to a substantial decrease in demand for motor fuels and refined petroleum products, which put downward pressure on refinery margins and made market conditions more challenging for refinery operators. In addition to challenging market conditions, increasing market interest in renewable diesel production and pre-existing plans to scale down or reconfigure petroleum refineries all contributed to the closing of a handful of refineries in 2020.
The EIA removed the following refineries from total U.S. operable capacity after they closed:
- The Philadelphia Energy Solutions refinery in Philadelphia, Pennsylvania: 335,000 b/cd
- The Shell refinery in Convent, Louisiana: 211,146 b/cd
- The Tesoro (Marathon) refinery in Martinez, California: 161,000 b/cd
- The HollyFrontier refinery in Cheyenne, Wyoming: 48,000 b/cd
- The Western Refining refinery in Gallup, New Mexico: 27,000 b/cd
- The Dakota Prairie refinery in Dickinson, North Dakota: 19,000 b/cd
Note: Closures reflect refinery capacity that was present in the 2020 Refinery Capacity Report but which we removed in the 2021 Refinery Capacity Report.
The EIA measures refinery capacity in two ways: barrels per calendar day and barrels per stream day. Calendar-day capacity is the operator’s estimate of how much a distillation unit can process in a 24-hour period under usual operating conditions, taking into account both planned and unplanned maintenance. Stream-day capacity reflects the maximum number of barrels of input that a distillation facility can process within a 24-hour period at full capacity under optimal crude oil and product slate conditions. Stream-day capacity is typically about 6% higher than calendar-day capacity.